1. Making an offer without being prequalified. It is even better to be preapproved! A preapproval will put you forward as a qualified buyer, giving you a better chance to reach an accepted offer with the seller. Take the time to speak with a lender. Their specific questions about income, debt, savings, etc will help determine a price range you can afford. Your credit will also help determine what loans you are elligible and there are some homes that cannot qualify for certain programs.
2. Limiting your search to Open Houses, ads and Internet Searches. Many homes listed on the Internet and in magazines have already sold or have accepted offers. It is in your best interest to contact a Realtor. They have up-to-date information and details that may not be available to the general public. They are the best source to help you find the home you want!
3. Choosing a Realtor who is not committed to forming a strong business relationship with you. Making a connection with the right Realtor is crucial. Choose a professional who is dedicated to serving your needs. Choose a Realtor that is in the business FULL-time.
4. Not considering long term needs. Generally speaking, when purchasing a home, it is better financially to plan on living there for a minimum of 3 years. It is important to look ahead 3-5 years to think if it will suit your needs at that time. And if you are transient and don't see yourself staying somewhere for more than 2 years, it might not even be in your best interest to purchase a home. And don't forget to consider resale potential of the home!
Can you really own a home for less than renting? YES! But keep in mind that there are many other costs than just your montly payment.
1. Maintenance Costs. Homes need to have routine & preventative maintenance performed in order to keep them in good condition. This results in annual expenditures you would not have while renting. Includes painting inside and out, servicing your mechanicals, caulking, etc.
2. In order to have the best chance of keeping a home's value from depreciating, you will want to consider potential updates.
3. Repairs will be your responsibility when you own a home and you can often expect an unexpected repair every year.
4. The first few years of paying on your loan will mostly be paying interest and the principle amount of your loan will take time to be reduced. Any amount you put toward your monthly payment above the minimum will also help lower your balance as well as reduce interest over the life of the loan.
5. Your home owners insurance policy can go up if you make claims, so be cautious as to what you claim or repair on your own.
For more information on what to expect and plan for when preparing to own a home, give me a call at 317-292-3882 and I'd be happy to set up a time to meet and answer all your questions!
After 3+ years of thinking of selling and buying a larger home, my husband and I finally took the plunge this year.
We recently closed on our new home at a 3.75% interest rate. If we had the interest rate we had on our old home (5.625%) we would have had to buy a home for $70,000 less to have the same monthly payment!
Since we closed, the rates have went up to 4.125%. Even that little jump would have resulted in $10,000 difference in purchasing power. This doesn't even begin to break down the difference in how much of your monthly payment goes towards principle based on the interest rate that the potential savings over the life of your loan.
That is something to think about if you have been waiting for the market to improve to sell your current home and "move up". As the market continues to improve, the sale price of your home may increase, but so will the home you are looking to buy and the interest rates too.
I'm glad I listened to my own advice!