There comes that time in your life when purchasing a home seems like a good idea. There comes that time in your life when insomnia becomes a real issue. Have you noticed that these two things happened at the exact same time? The myriad thoughts that are part of the decision to buy a home make your mind go on a carnival ride. Good luck sleeping with those questions as an every night companion. Down payment, interest rates, maintenance and upkeep, FHA, VA, HUD, square footage, property taxes ARGGGHHH, it’s just too much!
Deep breath, in through the nose and out through the mouth. It’s all too much because you have yet to consult with your friends right here. We have your Gildshire’s homebuyer checklist. A lot of what Gildshire found is particularly applicable for first-timers, but veterans can learn something, as well.
Know your timeline: By this, we mean how many years do you intend to live in the home you are considering buying. Most experts say the right answer is “at least five years.” For the first several years, your monthly mortgage payments will pay down interest but do very little for the principal. (Trust us on this. Don’t even look to see how little your early payments are paying on the principal. You don’t want to cry.) Suffice it to say, there is no equity taking place for quite some time. So, are you staying in your next residence for 60 or fewer months? Renting is your better option. That will give you the flexibility you need before settling into a home you intend to keep.
Plan your living space: This is a related issue to the one above. Plan ahead for what you will need for the period of time we listed above. Is it only you, or just you and one other person? Will it always be? Are you sure? Even if the number of people in the house stays constant, be sure to leave room for pets or hobby space.
How much can you afford for a down payment? You will hear other percentages and amounts bandied about, but 20% remains the industry standard, and there is a good reason. Mortgage insurance comes into play if the down payment is lower than 20 percent. What is the one thing you must know about mortgage insurance? It’s expensive! Homebuyers who put 20% down are the ones who reap the harvest of homeownership.
What mortgage length should you choose? Mortgage lengths come in 15-30 year terms, with another increment (usually twenty, sometimes twenty-five years) in between. I know there is a part of you that wants to opt for the one that burns the mortgage the fastest, but be careful. You should choose the term that allows you to stay as liquid as possible. Choose a longer-term loan, and make larger payments if you can. Otherwise, stay flexible for repairs and improvements.
Should you use a real estate agent, or strike out on your own? This one is easy, and the answer is buried in the question. No one wants to strike out. If this is your first rodeo, use a real estate agent. If it is not your first rodeo…use a real estate agent. This may be Gildshire’s most important piece of homebuying advice.
Location, etc. Yes, it’s real estate’s most hackneyed cliche. There is a ton of truth in it. From commute time to school districts to your leisure and pleasure preferences, location is more than an address. It also has a lot to say about your home’s eventual resale value.
Are you handy? Be honest about this one, because if you aren’t you may be playing the Cary Grant role in “The Money Pit.” However, if you are, consider a fixer-upper. Three or four weekends and your abilities will render that new home ready for callers.
Be present for the home inspection! There will be some cosmetic issues you have already spotted, but the licensed home inspector will find the hidden ailments.
Is it offer time? Communicate with the seller through your real estate pro. There’ll be some negotiating give and take. This is all normal, and shouldn’t be navigated in a highly competitive environment.
Does this all sound like too much? Take it step-by-step. The whole process may take six months or more, but how long has it taken to get to this point? When it is all over, enjoy your new home. Gildshire will bring our favorite merlot to the first barbecue you host.