Buying a home is one of the most exciting and stressful adventures that people take in their lives. The process of finding a real estate agent and looking at homes is fun and engaging, but the financial aspects of buying a home often leave people confused and frustrated. The commitment of buying a home is typically thirty years and this can scare some people away from buying a home. While the process is often difficult, it is a great investment and one that everyone should make in their lives. Before you jump right into buying a home, there are some things that everyone needs to know.
#1) Real Estate Tax
One of the main things that you and your family need to budget for before looking at or buying a home is the amount of real estate tax you may have to pay for each home. This tax rate will change depending on the location of the home, size of the home, school district you live in, size of the lot, and many other factors. Real estate tax can vary greatly so it is crucial that you understand how the amount will affect the amount of home that you and your family can afford. The real estate tax that you pay each month, or year, funds the public places in your new neighborhood.
#2) Current Interest Rate
Before you can put an offer in on a home to buy, you must first get pre-approved, unless you can afford to buy it without financing. Most people must get financed before making this large of an investment. Your bank can tell you the current interest rate. This rate will affect how much you owe each month. The interest rate will determine how much home you can afford and will affect your maximum budget and the price range of homes that you should look at. Purchasing a home when the interest rate is low is always best, but the competition is often higher when the interest rate is low.
#3) Know the Condition of All Major Appliances
Once you find a home that you and your family love you should always ask about the condition of the major appliances and the expensive items in the home. Understanding how old the furnace, windows, water heater, and other appliances are can help you determine if the home is right for you and your budget. If you know that the roof is older and will need to be replaced soon, you should budget for that before making an offer on the home. You can also ask for a home warranty to help you pay for any expenses of major appliances that break or need to be repaired during your first year living in the home.
#4) Have a List of Must-Haves Ready
When you meet with a real estate agent for the first time, they will ask you what you want in your next home. You should have a list of must-haves ready for them. You can include anything you want on the list to make the process of home searching a little bit easier for you and your real estate agent. If you know that you want a garage, make sure you tell your real estate agent this. They can filter the lists that they send you to accommodate anything that is on your must-have list.
#5) Know What Your Credit Score Is
One of the main things that everyone needs to know before starting the home buying process is what their credit score is. Your credit score will affect your ability to buy a home. Your credit score directly affects the interest rate that you can get and the amount of money that a bank will loan you to buy a home. If your credit score is low, you may choose to wait a year before buying a home. In that year, you can do things to raise your credit score, like paying off debts, to ensure that you have a higher credit score next time you want to get preapproved for a home. If you know what your credit score is before you go to the bank, you will not be surprised when they tell you if you should or should not buy a house at the current moment.
