While it’s fun to go house-hunting and dream about moving into your future home, it’s important to keep in mind that buying a home is one of the biggest investments most of us will make during our lifetime.
Becoming a homeowner is a long-term commitment that costs much more than just the down payment. Before you dive in, take the time to do your research. There’s a lot to know, and you can avoid many mistakes simply by being informed.
Here are some recommendations to help you prepare:
1) Define what you want and need in a home.
First decide on your non-negotiables: How many bedrooms do you need? What about backyard size and features, proximity to schools or work, or neighborhood features?
Then decide what would be nice to have, but isn’t necessarily a dealbreaker, like landscaping, a pool, or specific décor.
When defining your wants and needs, think about which items are personal preference vs. which would add value to your home.
Before your first house-hunting appointment, make a wish list or search online for a helpful home-buying checklist. Some of the nice-to-haves can be added later when your budget allows.
2) Understand how the home-buying process works.
- Determine your budget and what you can afford, especially your cash reserves for a down payment. A good rule of thumb is to look at homes priced at two to three times your annual income, keeping in mind that each homebuyer’s financial scenario is unique. Be careful not to take on a mortgage you’re not comfortable you can afford.
- Prepare for your house-hunt. Write down your wish list, including features you must have vs. features that would be nice to have and location and/or neighborhoods you want to consider.
- Find a good mortgage lender with an excellent reputation and get prequalified. You can get started by researching United Bank’s mortgage loan officers.
- Research homeowner’s insurance. Do you need additional coverage for floods, tornado, wind damage and wildfires that aren’t covered by basic insurance?
- Consider hiring a real estate agent to help you in your search or start house-hunting on your own.
- When you find the right home, make an offer.
3) Compare mortgage rates.
There are many options for comparing mortgage rates. The easiest way to start is by searching online.
Two common mortgage types are fixed-rate mortgages and adjustable-rate mortgages (ARMs). There are also low-down payment programs that provide greater flexibility to meet your financing needs.
Make sure you completely understand the rates, terms and whether the mortgage comes with a prepayment penalty or not. Don’t be afraid to ask questions. If you’re unsure where to begin, speak with a mortgage loan officer on our team.
4) Is buying a fixer-upper a good idea?
You might find a home in your dream neighborhood that needs work. Know that a fixer-upper can easily take you over your budget.
If you’re willing to spend extra on renovations (with confidence that you have the funding you need and that you know a trustworthy contractor), then maybe a project home is a good fit for you. However, beware of additional expenses, such as electrical upgrades and labor costs.
Every homebuyer should get a thorough home inspection and get at least three quotes before hiring a contractor. Consider an additional inspection when it’s raining, to thoroughly check the basement and foundation.
What if you discover one problem that leads to another? Do your research and ask a lot of questions to make sure you understand everything, especially worst-case scenarios.
At United Bank, we strive to make the mortgage process as simple and straightforward as possible. It all starts with reaching out to a member of our mortgage team or filling out our easy online application. From there, one of our knowledgeable mortgage loan officers can help you find the best loan option for your needs, then continue to work with you every step of the way on your home-buying journey—through closing day and beyond.United Bank | NMLS ID 522399 (www.nmlsconsumeraccess.org) | Member FDIC | Equal Housing Lender | BankWithUnited.com