Key Insights
- When it comes to signing a mortgage, you deserve to be picky! Shop around until you find the perfect fit.
- Ensure your mortgage is manageable, and that you have some extra financial cushion each month.
- Don’t worry about what kind of property the family across the street has. Instead, put your family and finances first.
While the housing market can change on a day-to-day basis, some home buying 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. Here are some insights you can use while purchasing a home.
Be realistic about what you can afford
First, don’t spend beyond your means. In other words, don’t buy a bigger or more expensive house than you can afford. While it’s true that lending standards have gotten stricter, homebuyers can self-regulate by purchasing homes no more than two to three times their annual income. Be sure to determine what you can afford to spend on a home at the beginning stages of your property search (learning your debt-to-income ratio is a good start). And remember, it’s not a bad idea to begin saving for your down payment now.
Shop around for a mortgage
As a prospective buyer, you have many finance and loan options. Since you will likely need a loan for your big investment, it’s a good idea to meet with various banks and lenders to ensure you're getting the best rate, terms and conditions.
As much as mortgage lenders are evaluating if you’d be a reliable client for them, you are also interviewing them to see if they’d be a good partner for you. Don’t be afraid to ask questions, take notes and do your research.
By shopping around for a mortgage, you may end up with financial savings and optimal conditions. 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. Some may even have special promos or financing options.
Make your mortgage manageable
In today’s credit-happy world, it may seem silly to turn down a large loan offered by your bank. However, by putting down a generous down payment and choosing a lower mortgage loan, you will offer your family a bit of cushion should your financial situation change.
It’s also a good idea to plan on how you’ll make your payments on time. Will you set up automatic payments, or put a note in your calendar? What frequency will you pay your mortgage? What account will you use to pay? Considering the “how” of paying your mortgage and planning ahead will allow you to remain up to date on your payments and keep you in good financial standing.
Want to gauge what your potential house payment could be? Calculate your monthly mortgage payment today!
Focus on the best purchase
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.
It may be best to buy a fixer-upper or an average-priced home so you can add value to it over time. If you buy the standout house of the neighborhood, it’s possible the property won’t appreciate as quickly as the mid-range homes surrounding it. It could also be harder to find a buyer later on if the neighborhood doesn’t improve around you.
Rather than picking the most trendy or modern home on the street, consider investing in a property with good bones that’s also within your price range. You can further lessen your financial strain and save money by spacing out upgrades and doing some improvement projects yourself.
Don’t worry about keeping up with the Joneses
Lastly, don’t buy more house than you need! With investment properties on the rise and social media fostering a digital “keeping-up-with-the-Joneses’” 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 be investing in a future that allows you more financial flexibility.
Put these tried and true tips to use!
Whether you find a forever property or a starter home you’ll have for a few years, these tried-and-true home buying tactics will help you make the most responsible decision. Reach out to Edina Realty or one of our agents to begin your property search.
Edina Realty Mortgage is an affiliate of Edina Realty. See Affiliated Business Arrangement Disclosure Statement
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