Things to consider when considering the purchase of a home!

Whether you are a first time home buyer or a Veteran  there are lots of things to consider when it comes to purchasing a home. Below I listed out what was on my list? 

Pre Qualification letter: This will give you a good idea of what price range you can purchase in. Having this prior to looking at properties is important. When you go to put an offer in having this letter will make your offer stronger. You get this letter from the lender you plan to get your loan with. They will require a few forms of documentation from you. Ex: paystubs, bank statements, W2 etc.

Once you know what price range you qualify for use a mortgage calculator ( just google it there are lots of free ones to choose from)  to see what your monthly payment will be. Many will allow you to add in property tax and PMI which is helpful since many home owners choose to bundle all of these charges into their mortgage payment to simplify things.

Knowing the price range you qualify for will also give you an idea about how much money you need to have for a down payment as well as for closing costs. 

Closing costs can be part of the offer, meaning you can ask the seller to pay for them. If you do not ask for this assume you will need 3% of the purchase price at closing. If you are selling a home you will be paying 6%.

Property Taxes: This is public knowledge and is typically included in the listing of a home. This is an annual cost, so you can divide by 12 to know how much it will add to your monthly payment.

Home Owners Insurance: This will fluctuate with the cost and type of your home. Cost can be higher for an attached home as well as for a rental property. You can call your insurance agent to get an idea of what the cost will be to you on the types of homes you are considering. They can give you the final cost once you have an accepted offer on a property.

Utilities: (Water, Gas, Trash, Internet etc) Create a budget of what things will cost. If you are moving from a 1000 sq ft apartment to a 2500 sq ft house then your utilities will go up. You will have more house to warm and cool, and potentially a lawn to water that you would not have had at an apartment.

PMI: ( property mortgage insurance) FHA loans have recently changed with them you will need to pay the PMI for the life of the loan. With conventional loans you only pay this until you have 20% equity in your home.

HOA: (Home owners association) Depending on the neighborhood you move into there may be an additional cost. Be sure to ask your agent what it will cover. Some ideas of items they may cover include:  the exterior of the home, front yard maintenance, pool, common areas, parks, internet, snow removal.

Other costs you should be aware of are the appraisal and the inspection. Both will vary in cost depending on your price range but your lender or realtor should be able to give you an idea of the cost when you get the pre-qualification letter.

When determining the type of house and location you are interested some things to keep in mind are:

How long do you plan to live in this house?

If you live there 2+ years beyond how long you plan to be there will it still meet your needs?

Is it close to work or school? How long of a commute are you willing to have?

Will the payment be something you can afford even if your expenses increase?

Do you plan to have kids or more kids in this house?

I also recommend creating a list of things you want in your house prior to actually looking at houses. This will remind you of what is important to you, and keep you from getting overwhelmed at all of the features each house will have. Creating a checklist is also helpful. Once you have looked at a few houses it will be hard to remember if it was house #2 or #5 that had that amazing backyard or wood floors etc. Taking notes and marking off features it has will help you to evaluate which house best meets your needs.

Last tip: Have fun with it! You will only purchase homes a handful of times in your life so try not to get stressed out with the process. Things will not always go as planned and you will not always have your offer accepted on the house you imagined yourself in, but things will work out. Determine what features you want and what price you are comfortable with and leave your emotions at the door! You have to stay rational and realistic and especially patient when buying a home. You may think paying a little extra just to get the house of your dreams will make you happy but a few months or years later you will likely regret that you went outside the budget you set for yourself so stick to your original plan, you made it for a reason :)