Buying a home can seem a daunting process. After the housing crash, with so many people financially devastated by plummeting home values and rampant foreclosures, many people are wary of taking the risk of home ownership. The reemerging real estate market is a different place, and the new lending process can seem overwhelming. If you want to buy, but have some reservations, knowledge is power. Understanding the often time-consuming process can make buying a home easier.
Many potential buyers struggle with knowing whether it is the right time to buy a home. A home is a long-term investment, and the current market is not attuned to fast turnarounds. As a rule, if you plan to stay in a home for more than five years, then it makes sense to buy. Any less than five years, and renting is probably a better move. When you decide to buy, take your time, and find a home that you will want to live in for years to come. Consider future needs: does it have the space for a growing family; is it in a good school district; is it near your work; is it located near the facilities and services you need? Find your dream home, the place plan to put down roots; do not just buy a house for the sake of being a homeowner.
There are many terms that will come up in the home buying process that you may not be familiar with. Contingencies, earnest money deposits, escrow, and others will come up while you move through the process. Understanding the meaning of this terminology can help to alleviate some of the stress and uncertainty when buying a home. The mortgage process is also likely to have many terms and important documents you have never encountered before. This is most likely the largest purchase many of us will ever make, and understanding the paperwork and the terms included on the contracts will make buying a home easier. Familiarizing yourself with the terminology and the paperwork beforehand will make buying a home easier. This can be as easy as asking your real estate agent or looking online or at your local library.
Your mortgage will not be the only cost associated with homeownership. To be a smart buyer, you must understand the true cost of the home you want to buy. In addition to the principle and interest on your mortgage will be your real estate taxes and homeowners insurance. If you are putting less than a 20% down payment on the purchase, you may have to pay mortgage insurance as well. If the home is in a development there may be homeowners’ association fees that you will be responsible for also, and those are just the regular monthly payments.
As the homeowner, any repair and maintenance costs will be yours and yours alone. One way to anticipate some of these costs right away is to pay close attention to the home inspection. By taking the items that need to be addressed on the inspection and pricing what they will cost to repair, you can prepare for some of the issues that may come your way in the first months of owning the home. It is also a good way to get an idea of some of the typical repair and maintenance issues that are associated homeownership; remember, your yard, your roof, your pipes, wires, and walls, and your appliances are all yours to care and repair.
Research and preparation are crucial to being a smart buyer, and will make buying a home easier. Ask questions and do your research so that you know exactly what you are walking into when you walk into your new home.
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About The Author: Tom Davidson is the acting Director of Sales & Operations for Colibri Real Estate, LLC. Since 1996 the companies under this banner have offered online real estate licensing and insurance licensing courses as well as online real estate exam prep and insurance exam prep.