Best Home Buying Practices

By Jason Deines

Buying a home is one of the most exciting times in a person's life. Not only is it a huge financial investment but it can also turn out to be one of the best assets later in life. When buying a home, it is viewed as a long-term decision it typically tends to pay off and be a smart investment. The proper way to go about making this type of monumental decision is to define your goals and how you plan on achieving them. This, of course, relates to all parts of life not just buying a home.

Setting Goals

As you examine your goal on buying a home there are several things that need to be taken into consideration. The most obvious is how much home you can afford. This is a very important question because you may be paying on your home for the next 30 years. You don't want to be strapped month-after-month just trying to make your mortgage payment or worse, losing your home because you get behind on your mortgage payments.

The length of time you plan on owning your home should also be evaluated as you develop your goal to buy a home. You may be buying your very first starter home or planning on building your dream home. It is important to know because it will affect many of your decisions later down the road.

Pre-Approved for a Home Loan

Getting pre-approved for a home loan is a critical step in the home buying process. It tells real estate agents and home sellers that you are serious about buying and know what you can and cannot obtain. Nobody likes to have his or her time wasted or works for free so be courteous and prepared when you start the home buying process. Getting pre-approved for a home loan accomplishes several critical items. First off, you find out what a bank is willing to lend you and secondly, you can find out if there are any problems areas that need to be fixed within your credit history.

Down Payment

There are several types of programs available for first-time homebuyers to get into a home without having to save 20% of the purchase price as a down payment. However, many lending institutions like to see at least 5% saved for a down payment. There are advantages to being able to put 20% down on your new home purchase. Maybe the most important, you won't have to borrow as much money and save in the long run. Also, most lending institutions require private mortgage insurance if the 20% is not met. This just adds cost to your overall home loan and increases your monthly mortgage payment. Plan on saving as much money as you can before buying. Put together a monthly budget that allows you to save, save, save.

Schools, Neighborhoods, and Time

Price is usually the motivating factor when buying a home and often times dictates the neighborhood you live in. In all honesty, this should not be the case unless it fits with your long-term goals.

If you have children you may want to check out the schools in several neighborhoods to find one that will suit your children best, ones that have easy access, and transportation.

If you spend a lot of time at work, which most of us do, you may want to drive the commute during the rush hours to see what you will be dealing with. This goes for any other important places that you will be frequenting. The key is to determine if you can live with the time it takes and possibly the lack of convenience of getting to your destination. Many times this most likely is not an issue but don't you want to know that you will be sending an hour and a half each day on the freeway?

Must Haves

When buying a home we all have our wish list. On this list we have things that we must have and things that would be nice to have. This list comes in handy when the cost of having everything on the list outweighs what you can afford. Typically, the more things you require the higher the price of the home. Know what you can do without in order to control those costs.

Tips for Buying a Home

  • Shop and compare home loan products
  • Know your needs and wants in a home
  • Take your time - don't rush
  • Be persistent and check the market daily
  • Don't make hasty decisions
  • Don't spend more than you can afford
  • Get a home inspection

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