Buying a home is likely the biggest purchase you will ever make. For most of us, it is also the most extended term purchases we undertake, both in use and financing. Before you buy a new home here are five things to take into consideration.
Real Estate Agent
Get a good real estate agent. This is the person who can help you find what you want, what you need, and help you negotiate for a price you can afford. A good agent does more than show you homes. Skipping this step does not save money. Sellers pay the commission which is then split between the listing agent and the buying agent. If you don’t have an agent, the entire commission goes merely to the listing agent.
In general, your mortgage should cost no more than 30% of your annual income. However, there are many other costs—monthly and annually—that you need to figure into what you can afford. Property taxes, insurance, and homeowners associations may be the biggest. You should also budget for basic home maintenance, significant repairs—such as roofs—and eventual appliance replacement. If you’re looking at Mississauga homes for sale, in Canada, even more rules could come into play that could affect the actual cost of buying a new home.
Location makes a difference not only in what you pay but in how the worth of your home might change over time. There are other things to consider too such as schools, commutes, noise levels, and how the neighborhood is trending. Is the neighborhood one rising or declining in popularity? In addition to the overall location, think about the home’s position on the lot. Are there potential drainage issues in the event of heavy rain or flooding? In general, homes that are set back farther from the street give a feeling of more privacy. Trees can add privacy, but large trees near the house can be a potential hazard from falling limbs.
What size home do you need? That depends on where you are in your life. If you’re just starting out, you need to think of your future family needs so that the home you buy has enough room for children. However, you don’t want to buy more house than you can really afford or maintain. The reverse is also true. If your children are getting ready to leave home, will you be able to repurpose their bedrooms to other uses, such as a home office?
When you’re attempting to qualify for a mortgage, lenders will perform a debt to income analysis to determine what you can afford. Student loans get serious looks because of the array of repayment plans available and the amount of the loans. The average student loan debt for a 2016 college graduate is a little of $37,000. Even if you’re not currently in repayment, that needs to be calculated into what you can afford, so it doesn’t come back to bite you.
It can take five to seven years to build equity in a home, so it’s essential to plan carefully before purchasing.