Before You Buy: 6 Questions to Ask
January 14, 2022
Whether you’re hoping to stop “throwing away” rent money, trying to take advantage of low interest rates, or simply wanting to move somewhere to put down roots, purchasing a home can be a good investment under the right circumstances.
According to the website Investopedia, there are several key questions to ask before you take the plunge and go after your dream home, particularly for first-time homebuyers. Let’s take a look at what to consider:
- How’s your financial health?
Buying a house is a major purchase, so it’s smart to take a serious look at many different aspects of your finances. Start with your savings. Before you take the financial plunge, you’ll want to have saved at least three to six months’ worth of living expenses— just in case you were to lose your job or face any unexpected financial crisis, or you’re looking to do some significant home improvements without borrowing more money.
Next, review your spending. Find a system that works for you, and start tracking all of your monthly expenses, from food and utilities to gas and entertainment. This is key to paying a monthly mortgage on time. Yes, welcome to adulting.
Finally, learn what’s on your credit report. You’ll not only want to know the score, but also see if there are any pieces of false information that could affect your credit rating (and therefore, your ability to secure financing). Lenders want to keep the debt-to-income ratio low, so if you haven’t already, start paying down any significant credit cards to show that you’re a good candidate for a mortgage.
- Which type of home will best suit your needs?
There are a number of options available for a residential property: a single-family home, a duplex, a townhouse, a condominium, a co-operative, or a multifamily building with two to four units. Each option has different pros and cons, depending on your homeownership goals.
- Which specific features do you want in your ideal home?
This list is more of a “wants” and “needs” list to determine what are your must-haves in a house (i.e., the number of bedrooms and bathrooms or a certain school district), as well as any other nice-to-have options, such as finding a corner lot or a certain type of kitchen design.
- How much mortgage will you qualify for?
You’ll want to go through the pre-approval process with a lender to get a good sense of what your budget is when you begin to shop for a home. This is also a good time to look at interest rates and discuss terms of your mortgage (such as a 15-year vs. a 30-year loan), which will impact your monthly payment.
- How much home can you actually afford?
On paper, a lender might say you could afford a $300,000 home. But let’s say you’re planning to go back to grad school and will be adding some school loans in a few years, or you’d like to keep your expenses low enough to live on one income. Additionally, be sure to factor in the property taxes, any planned major renovations like a new roof, new windows, or a bathroom overhaul, and allow for a first-year budget that can afford movers, furniture, holiday décor, outside tools, etc.
- Who will help guide you through the homebuying process?
Now is also a good time to decide if you’d like to work with a professional realtor or buy a home without an agent to guide you. A knowledgeable professional can help guide you through the process of finding listings, recommend service pro’s in your area, and finesse the negotiations.
At Beltmann, we’d love to help you prepare for any upcoming moving and storage needs, whether it’s simply across town or a full long-distance relocation. Contact us today for a free contactless quote, and we’d be happy to help walk you through the process.
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