July 22, 2019 at 12:46pm | Phil Aitken
A home purchasewill likely be the largest financial transaction of your life.  As you prepare to move forward in this monumental process, there are ten questions you should answer before you sign on the dotted line:

1. Are you in it for the long haul?

A house isn't just a placed in which to live.  It is an enormous investment.  In fact, most people stay in one home for a minimum of ten years before selling and moving on.  Others only make one house purchase and choose to stay put forever.  As yourself if you are looking for your forever home or if you are planning to buy a home to live in for a shorter time.  This question alone stands to impact the way you shop.  

2. Are you improving your quality of life?

The purchase of a home should not be viewed as a short term financial investment because such a purchase will not yield an impressive return.  Therefore, it is important to look at such a prospect as a long-term investment and one which will improve your quality of life: the way you sleep, your level of activity, proximity to friends and family, etc.  Your residence should improve the way you live and help you to succeed in building the life you want to have.
Related: "How Predictable is the Market?"

3. Where is your focus?

Focus is everything.  Zero in on your next house according to your budget and needs.  Don't become swayed by features you cannot afford to operate such as a built-in swimming pool or perks that are likely to drive the  price up well over your budget.  Stick to your needs and your desired neighborhood and don't allow the unnecessary bells and whistles to sway you in the wrong direction. 

4. What is your budget?

Budget is everything in the home buying process.  In fact, this should really be the FIRST question buyers ask themselves.  Don't waste your time and the agent's time looking at homes when you don't know if you can afford one.  There is little in life that is more depressing than being house-poor like the 29% of buyers who "over-purchased" last year.  Perhaps you need to buy on a smaller scale, in a different neighborhood, or a bit farther from work, but stick to a realistic budget in order to best afford the surprise maintenance "opportunities" that are known to occur for home owners.

5. Can you afford the down payment?

Home purchases are best when buyers can afford a 20% down payment.  This will help to reduce private mortgage insurance and reduce your financial risk, helping to ensure you do not owe more than your home is worth.  

6. Do you have six months in reserves?

Six months worth of savings is also crucial for new home owners.  In the event of unexpected life events such as illness or unemployment, such savings act as a cushion from financial hardship due to missed mortgage payments and deteriorating credit.  

7. Are you pre-approved?

You need to be pre-approved by a lender before you start looking at homes.  This can be cumbersome, however your home shopping expedition with end in disappointment if this process does not occur first.  In addition, your status as "pre-approved" will lend greater credibility to any offers you submit as sellers will understand that you have financial backing.

8. Are you getting the best rate?

Be sure to shop round for mortgages in order to obtain the best rate and the mortgage that works best for your situation.  Not all lenders and mortgages are created equal, despite federal regulations.  You could save as much as $50 per month.  That would lead to a savings of $18,000 over the course of a 30-year fixed rate mortgage. 

9. Are you spending more than 1/3 of your income?

It is best to operate within a budget that does not exceed one-third of your taxable income.  Anything in excess of this amount can be difficult to manage, especially in the event of an unexpected life change.

10. Are you willing to walk away?

The home shopping process can be tough, however it pays off in the long run if you are willing to walk away from the homes that exceed your budget or don't exactly meet your needs.  If a seller rejects your offer, walk away.  Don't push your budget beyond its limits and wait for the right situation that will still be a good fit for you in years to come.
Related: "A Senior Guide to House Hunting in Jacksonville"

For more information, contact The Aitken Home Team today!



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