Are you ready to purchase a home? The biggest financial decision you will make is buying a house. Here are 10 Things That You Must Know About Buying a Home .

 

1. Trust a reliable realtor. Some buyers are hesitant to use a Realtor because they feel it increases the cost of the home. Remember that the commission is paid by the seller and not the buyer. Brooke Willmes, a real estate agent at SPACE & COMPANY, Philadelphia, states that potential buyers need to remember that a listing agent (the agent representing a seller) does not protect your interests and that “that agent would simply pocket both the commissions.” This means you are not saving money. An experienced realtor can represent your interests and help you navigate the home inspection process.

2. You must remember that every house purchase requires a contract. There are many papers to sign. Many of these papers, which are contracts, look like standard home-buying contracts that have no room for negotiation. This is false. Contracts should be negotiated. A standard agreement doesn’t necessarily have to be signed. You can opt for a different part of the agreement if you need more time to inspect your property, waive a radon test, or make your purchase subject to mortgage approval. A savvy realtor can assist you with this.

3. You don’t have to buy a house just because you want it. Before you agree to buy what you think might be your dream house, consider your long-term plans. Do you plan to stay at your current job? Are you considering getting married? Have children? You may not be able to pay down your equity in five to seven years depending on the market or the terms of your mortgage. If you’re not sure that your house is right for you, keep looking.

4. Consider commitment. This is not just about your mortgage. The laws in your state will determine how assets are handled when you marry and how they’re divided at divorce. These rules do not apply to those who are not married. This means that you must think long-term. If you are buying a house together with someone other than your spouse, you should have an exit strategy in place. It is a good idea for you to have an agreement regarding titling, mortgage payments, liability, repairs, and other matters. I recommend that you get a lawyer.

5 Don’t forget about paint. Sometimes, your dream home has one room you are already dreaming of changing. Willmes advises that while it is relatively inexpensive to repair cosmetic problems (a little paint or wallpaper), making major changes to the kitchen and bathrooms can be costly. “People often focus on the price of cabinets, counters, and appliances, but forget to consider the labor costs, which can sometimes double or triple the cost. This doesn’t mean you have to give up on a house that needs significant repairs, but you must consider those costs when deciding whether or not you can afford to purchase the property.

6. Choose the house that you are comfortable with. It is possible to get a mortgage at a lower price than you think you can afford. My husband and I were approved for a mortgage that was three times larger than what we ended up spending when we bought our first home. Our finances were looking good after law school. We also worked for well-respected firms. We were not sure that our income and expenses would stay at these levels so we lowered our expectations. Two years later, just as the economy was turning south, we opened our own business. We could still afford our monthly payments despite having a less expensive house. What is the best ratio? While some lenders recommend that you are able to afford mortgage payments equal to 1/3 of your gross monthly income, others recommend closer to 28% for housing-related costs such as mortgage insurance and taxes. Many factors are involved, including your projected income, market conditions, interest rates, mortgage type, and the market. Ask your mortgage broker for help.

7. Don’t fixate on the purchase price. The purchase price is just one piece of owning a house: be sure to consider all of the costs associated with your potential new home.Prospect mortgage Branch manager in PA. He explains how a significant revision to FHA guidelines in 2015 adversely affects many first-time homeowners with student loan debt. A borrower who had student loans delayed for more than 12 month could be allowed to discount the debt. However, the new FHA guidelines mean that borrowers are now charged 2% of the outstanding student loan balance. This applies regardless of whether the borrower has a conventional or non-FHA loan. Griesser recommends that you enroll in an income-based repayment program if your student loan is under deferment. This will allow your lender to accurately assess your ongoing liabilities.

9. Do not let the home mortgage loan interest deduction get you down. Only 1/3 of taxpayers are eligible for the itemized mortgage interest deduction. If your deductions exceed the standard deduction in 2015, you can itemize. The standard deduction rates for married taxpayers are $12,600 and $6,300 respectively (these rates remain in 2016). If you do decide to itemize, keep in mind that your tax savings will not be greater than your out-of-pocket expenses. For example, if you are in the 28% bracket, $5,000 more in interest would only save you $1,400. You can’t expect the same savings every year. Mathematically, the more time you own your home, the lower the interest you will owe. This is good for building equity, but it also means that you will get a smaller tax deduction when it comes to taxes.

10. It doesn’t mean you have to purchase a home by 35. It’s a major decision. While it may be a good financial investment, it is not for everyone . There are many things to consider such as the housing market, interest rates and timing, as well your future plans. Some people want more mobility or flexibility, while others may have a change in career or family plans. Renting as a test drive is a good idea if you aren’t sure about the neighborhood. A realtor can also help (see #1). You don’t necessarily have to make the move. There are many rental markets across the country. In some areas, young professionals prefer renting to homebuying in order to save money and stay mobile. The statistics show that home ownership was 64.9% last year. This does not include borrowers at risk of default. However, the 2010 ownership rate was close to 69% (downloads in a pdf). This is not counting borrowers at risk of default.