What to consider when buying your first home

With interests rates at an all time low, there may never be a better time than now to buy and/or build a new home. But before you go rushing out looking for your dream home, there are several important things to consider while you are on the hunt for a house.

Last summer, my wife and I found ourselves ready to take the plunge into home ownership. We had spent a bit of time living with the in-laws due to a downed economy and were in desperate need of personal space. Once we had decided to take the step, we were constantly browsing realtors, online listings, real estate websites, etc...never really taking the time to consider what was right for us on the front end.

We quickly discovered that while searching and buying your next home may prove to be both exhausting and enjoyable experiences, there were many things that we still needed to research.

1. What Type of Home is right for you?

 

Depending on where you live, there is most likely a wide variety of home styles to select from when choosing your new home. town homes, condos, single-family homes, etc... While everyone's personal finances and scenarios are different, there are a few universal factors to consider. For instance, most town homes are statistically harder to resell, they usually come with higher HOA fees, and of course you get to know your neighbors very well whether you like it or not. When my wife and I were looking for our home, we automatically resorted to touring several town homes simply because of the fact they were cheaper. This is not always the case! Let's say you buy a town home and finance 130k over 30 years at an interest rate of about 3.75%, you might end up with a payment around $750. Tack on an additional $100-$200 in HOA fees and you should be paying roughly $850-$950 without insurance. Now in a different scenario, let's say you buy a single family home and finance $150 at the same rate. If you live either in a neighborhood with low, or better yet, NO HOA fees, you should be paying around $850-$950 without insurance. The same price! Granted this won't apply if you decide to live in a glamorous neighborhood with fancy amenities and high HOA fees. If that were the case, you can probably choose to afford whichever type of home you want. Overall, what's important is that you consider all possibilities before you rule any options out.

2. How do I know the Quality of a Home?

You wouldn't buy a car without popping the hood would you? The same should apply to a house...well sort of. Fortunately, my wife and I were accompanied by a family friend that was experienced in building homes and real estate, so our initial inspections were more thorough than they would have been on our own. If you can't have someone knowledgeable in this area with you, then it is probably best to try to research the company that built the home. You can discover what others are saying about that company, if they have a solid reputation, how long have the been in business and what their strengths and shortcomings are. The company that I worked with was Celebration Homes of Nashville, TN. If you live in the Nashville, TN area, I highly encourage you to check out some of their work at http://www.morespacemorestyle.com. Make sure that if you decide to make an offer on a home, you make it contingent upon passing a certified home inspection. That way, if the inspector finds something wrong with the home, like bad plumbing, electrical and HVAC, you'll have an exit and won't be contractually obligated to follow through with your offer.

3. How much Should I Spend?

This is probably the most important question you will ask yourself. There are many different perspectives on this, but my personal opinion would have to agree with Mr. Dave Ramsey's view. Make sure you are spending no more that 25% of your take home pay on your mortgage. Granted, some of us are better at managing money than others, but a safe rule of thumb should be no more than 25%. If that puts your house budget in the $150k range, that does not mean to necessarily rule out houses in the $160k or even $170k range. It is a buyers market right now, so sellers may be a lot more willing to let their homes go for a lot less. Also, be careful of making too much of a "lowball" offer. You might offend the seller and he or she will choose to not do business with you. And lastly, don't forget to factor in closing costs, and try to safely put as much cash down up front as you possibly can. The more you have in a down payment, the lower the interest rate you will most likely receive.

The housing market is on the mend, so if you're thinking about becoming a homeowner, be sure to not miss out on these historically low interest rates. This is probably the lowest it will be in our lifetime, but first just make sure you and your family are ready for the responsibility and commitment buying a home requires.

Article Source: http://EzineArticles.com/?expert=Jason_A_Raines

 

 

 

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