Buying a home is the American dream. It is a milestone for many and, probably, one of the biggest financial decisions you can make in your life. Here’s all you need to know.
Finding your dream home can be overwhelming. There are so many things to consider that you could easily feel stressed out. To minimize this as much as possible, the best you can do is educate yourself about the real estate market and how it works.
Think about your needs
Before you start browsing your options, determine what you need. Identify those non-negotiable things you need your house to have and those things you’re more flexible about. Decide if you want a house with more rooms but no backyard or the other way round. Make a list of all those things so you keep them in mind at all times, because when you actually begin your search, it’s really easy to lose your focus.
Of course, your house search is going to be tied to your financial situation. Make a budget and look for options that fit it. Ideally, your mortgage monthly payments should be less than 28% of your monthly income. Another good idea is to look for a house that is up to three times your annual income. Avoid looking for houses that don’t fit your budget, as this can be a bit frustrating. Find the best options for you.
Save up for a down payment
How much you should put down on a house is a complex issue. You might get a loan with as little as 3.5% saved to put down, but —of course— the higher your down payment, the better. Most mortgages require between six to ten percent of the property value as a down payment. Twenty percent is the perfect down payment, but don’t go beyond that because you may diminish your returns.
Not all lenders offer the same conditions. Actually, mortgage providers offer a wide range of services and contracts and the smartest thing you can do is shop around to see which one is the best for you. Check the deals, but also check the customer service they provide, as you will be paying your mortgage for 25-30 years.