Buying a House? 2 Important Questions to Ask Yourself
Posted on: 31 October 2016
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One of the biggest purchases you will ever make will be a house, so it's very important that much thought has been put into the decision. Homebuyers should be very satisfied with the house that they decide on and know they are capable of paying off the house in the future. Before you even start the process of buying a home, ask these two questions.
How Long Will You Be in the Home Before You Sell?
While chances are that the first home you buy won't be your forever home, it's also important that you don't stay in the house for just one or two years. A common real-estate rule is that you should be living in a home for at least five years before you sell it. This is because it's not financially worth it to buy a home when you stay in it for any less time than that.
A common mistake homebuyers make is buying a small home as a starter home that they quickly grow out of. It could be a lack of bedroom and nowhere for the kids to go, or you could start making more money and wanting a home that's bigger.
The problem with selling too quickly is that there are a lot of costs that are hard to recuperate. The mortgage's amortization schedule has you paying more money in interest at the beginning of the loan, so a small percentage of your home's mortgage actually goes towards equity in the home. You'll also be paying closing costs when the home is bought or sold, and that can eat into a large chunk of savings.
Things may be different with your specific situation; run the financial figures on your own to figure out when is a good time to sell.
Can You Afford the House You're Purchasing?
Another mistake is purchasing a home that is too much money for your budget. You must factor in all aspects of home costs, which includes the mortgage, taxes, and insurance. While the bank may approve you for a loan that is fairly big, know that you shouldn't necessarily get a home that is around the top of your pre-approval estimate. If you end up having to sell the home prematurely because you cannot afford all of the payments, you'll end up losing a lot of money on the deal.
That said, it is always a good idea to go over your finances with a local real-estate agent, such as one from Leading Edge Real Estate. They can advise you on a home that is right for you.