While the housing market can change on a day-to-day basis, some homebuying tips always retain their truth. By following the advice your parents and grandparents likely considered as they purchased their homes decades ago, you can be sure you’re responsibly undertaking the biggest investment of your lifetime.
Size and pricing
First, don’t buy a bigger house than you can afford. Many homeowners learned this lesson the hard way when the economy (and home prices) recently bottomed out, leaving millions underwater on mortgages they could no longer afford. While it’s unlikely that lenders will loosen their standards back to previous levels, homebuyers can self-regulate by purchasing homes no more than 2 – 3 times their annual income.
As a prospective buyer, you have many finance options. Since you will likely need a loan for your big investment, meeting with potential banks and lenders can assure you're getting the best rate, terms and conditions. By shopping around, you may end up with financial savings and optimal conditions. Be sure to compare fees associated with applying through multiple lenders, and don't be afraid to mention you are considering competitors as it may earn you better rates.
In today’s credit-happy world, it may seem silly to turn down the full loan your bank offers. However, by taking a lower amount, you will offer your family a bit of cushion should your financial situation change.
Style and comparison
Perhaps the most common advice parents and grandparents give out is, “Don’t buy the nicest house on the block.” While humility is a wonderful trait for anyone, this advice is also financially sound. Home values tend to balance out over time, so if you buy the standout of the neighborhood, it’s possible the property won’t appreciate as quickly as the mid-range homes surrounding it.
Keep extravaganze minimized
Last, don’t buy more house than you need! With McMansions on every block and Pinterest fostering a digital “keeping-up-with-the-Jones’” mentality, it seems as though everyone is living above their means these days. By choosing a home that you can grow into, but isn’t too big or extravagant, you’ll follow the footsteps of the previous generations - who are by and large considered more financially stable than today’s current generations.