Are You Ready For Home Ownership?
Buying a home is often the single largest investment most people will make in their lifetime. Browsing available properties and choosing the styles and features that best compliment your lifestyle are important (and exciting) aspects of the home buying process, but in order for the purchase to be a satisfying experience, you must be prepared for the additional responsibilities associated with home ownership.
People often focus on fulfilling their wish-list, choosing new paint colors, and deciding how to decorate when shopping for a new home. While these are all important factors to consider, remember that owning a home also involves less-than-glamorous responsibilities as well, such as paying the mortgage and property taxes, and maintaining the home.
Below are several key factors to consider that will help you get the most out of the home buying experience, and out of your investment. By answering the questions below you will be better prepared to make an informed and educated decision that will set you on the path to building memories in your new home.
Questions for Prospective Homeowners
Are you ready to buy your first home?
Buying a new home involves being prepared both mentally and financially for the challenges that will arise. Home ownership carries both rewards and risk. Each month as you make a mortgage payment you are building equity in your home, but the costs to maintain that home and pay for repairs are often expensive.
Being a home owner means that you should be prepared financially and emotionally to deal with problems as they arise, whether it’s fixing a plumbing problem or replacing a leaky roof. It also means that you need to be prepared to maintain the property, including cutting grass, pruning trees, and taking care of your swimming pool.
Be realistic about what you expect to gain from owning a home and the chances are that you will appreciate the rewards even more.
How much can you afford to spend on a home?
Many people choose to determine how much they can afford to spend before shopping for a home, which can help to avoid disappointment if your salary does not stretch as far as you thought. Once you determine how much you can afford to spend, you will have a better idea of which property features and expectations are realistic for you.
Remember that most people cannot afford to buy their dream home when they make their first purchase. It’s a better financial strategy to buy a more modest home (and build equity towards buying your dream home in the future) than to buy more than you can afford now and live under constant financial stress (and risk losing your investment if a crisis arises).
Being ‘house poor’ means that too much of your annual income is being spent on your mortgage, taxes, and maintenance and this negatively affects your quality of life. Choose a budget that will allow your new home to be a point of pride and not a financial burden.
What is your debt-to-income ratio?
Your debt-to-income ratio is the equation that lenders use to determine how much you can afford to spend (borrow) for a home purchase. Your housing debt should not exceed 32% of your income, and your overall debt should not exceed 40%.
This ratio is important for mortgage lenders, but it is also important for you to keep in mind after you buy a home. Once the papers are signed and you have moved in it can be tempting to increase debt to buy furniture or do renovations, but exceeding 40% puts you in the same risky financial situation as if you had taken on a higher mortgage.
It’s also important to realize that 32% of your income can go a lot further in some areas than it does in others. The square footage in a highly-prized urban area can be very expensive when compared to a more rural area. If you can be flexible in a location, you may find that your budget stretches further than you thought.
What type of property and neighborhood suits you?
Do you picture yourself living in the city and having no exterior building maintenance or do you like the idea of cutting grass and climbing a ladder to clean out your gutters? Would you prefer to pay a maintenance fee each month and have nothing to worry about or would you like acres of land, with endless trees that you can chop down and use for firewood in the cooler months?
Answering these questions will help you narrow down your search before you even begin to look. You might discover that you prefer a condo with maintenance fees, a ranch in the suburbs, or a hobby farm in the country. You might even find that you need to spend a little time figuring out what you want.
Springbok Realty Can Help
A good Realtor will work hard to get you into the property that is perfect for you. Our real estate team is dedicated to finding you the right home at the right price because we know that happy homeowners are they key to our success.
We make buying your first home as worry-free and enjoyable as possible. We will work with you to determine your budget, your must-haves, your wish-list, and your ideal neighborhood. Our job is to merge your budget with your needs and wants whenever possible to find you a home that you can be proud to call home.
We help you to stay focused during the home shopping process. Visiting multiple properties and seeing all of the different features can be overwhelming. We help you to remember the features that you are looking for, and we will weigh the pros and cons of each property.
We actively search for properties that meet your criteria and work to get you into the best home for your preferences and budget. Once you’ve chosen the property, we help you make an offer. We prepare the paperwork and present the offer to the seller or seller’s real estate agent. An offer will include items such as deposit, terms, chattels (items included or excluded in the sale), closing date, and other factors such as whether the offer rests on a home inspection or financing.
The seller may accept or reject the offer. They may counter with a higher price. We walk you through each step as it arises so that you are an active participant in your home purchase.
In most cases a home inspection should be completed which will identify harmful materials in the home such as lead, mold, or asbestos, as well as pests, faulty wiring, faulty heating or cooling equipment, leaking pipes, rotten structural elements, or structural issues such as a crumbling foundation.
Although home inspections can cost a few hundred dollars, they can identify potential problems that present a danger to you and your loved ones. These issues can help you determine whether to request a lower sale price (to allow you to fix the problem) or to back out of the sale altogether. We can recommend several home inspectors for this important step.
Once an offer has been accepted, and the home inspection is complete, you will require a real estate lawyer to ensure the purchase is legal and binding.
The Legal Side and Closing
Once we find your perfect property, and you have decided to make an offer and purchase, it’s time to engage the services of a good real estate attorney. We will be more than happy to refer to one that we are sure will help protect you.
Transferring land and home ownership can be tricky, but a lawyer’s job is to ensure that you obtain clear title to avoid expensive legal issues down the road. Their fees can range from several hundred dollars to thousands, but this step in the home buying process should not be avoided.
Before closing the deal, we will do a final walk-through of the property with you. The walkthrough ensures that all terms agreed to in the purchase are met – such as included chattels, removal of any items, and that the property is in the condition expected.
From the moment you hire us to represent you in the home buying process until the final papers are signed and you have your new keys in hand, we will be there to help you navigate the complicated home buying process. Our job is to make it easier and more enjoyable for you while ensuring you get what you want within your budget.