Buying a house is one of the biggest decisions you’ll make in your life, and usually the largest single purchase you’ll ever make. That means that before you sign the deed and get your mortgage squared away, there are some serious considerations that should go into your selection. Buying a home can be stressful, but if you take it step by step and you’re sure to cover your bases, it’s totally achievable. In this post, we’ll walk you through 5 of the most important factors to consider before you buy your first house.
Factor 1: your all-in budget
First things first. You need to know how much money you can comfortably spend on your home. This will largely depend on three factors:
- Your monthly income – both how reliable it is and how much you’re earning
- The amount you’ve saved for a down payment
- Your credit score (more on that later)
It’s a good idea to keep your mortgage payment under 28% of your monthly income. So, as you calculate your how much house you can afford, it’s a good idea to first figure out what your gross income every month is. You can calculate your gross income by looking at your monthly paycheck (or averaging your monthly paychecks if you work hourly) after taxes, then subtracting monthly payments that you know you’ll continue to make, like insurance, internet, and car payments. This will give you an idea of how much you can afford to spend on a monthly mortgage payment, which brings us to our next item.
Factor 2: your financing options
More likely than not, you probably won’t be able to purchase your house in cash. And that’s totally fine – almost no one does. Securing a mortgage to finance your home purchase is just one of the important steps you have to take as you progress along your real estate journey.
Remember earlier when we mentioned your credit score? That was because your credit score, basically a measure of how trustworthy lenders find you, helps to determine what your interest rate will be. Borrowing money isn’t free, and the amount you have to pay to do so will depend on how successfully you’ve paid off debts in the past.
Those with strong credit can usually take out a loan with their bank at a reasonable interest rate. However, if your credit is weak, it might be worth it to take some time to repair it before getting a mortgage. If you just can’t wait, options like Griffin home loans, which are available to those with lower credit, are available. These usually come with strict terms, however, so be mindful.
Factor 3: kinds of home and lifestyle
This one is much more fun. As you look into purchasing a home, you’ll get to decide on the lifestyle you want to live. What part of town are you looking at? Are you interested in purchasing a large cookie-cutter suburban home with a yard and a pool, or are you a sleek urban dweller who lavishes themselves in a stylish uptown apartment?
Perhaps you want to live off the grid in a Tumbleweed tiny home, towing your abode from site to site as you tour the country? These options are totally up to you, and it’s important that you know just what you want out of your home. Don’t rush into buying something just because it looks like a good deal. Remember, in all likelihood, you’ll be trying to make a home there.
Factor 4: consider the housing market
This is a trickier one and probably a lot less fun, but it’s something you should definitely think about. Is the housing market strong? Is it in a low period that you expect will pass? While the main purpose of buying a house is to live in it, it’s also a good way to build wealth toward the future. You want to be sure that the investment you make now will pay off down the line, so paying attention to nationwide and local housing market trends is essential.
It’s also important to seriously consider the location of your purchase, as an up-and-coming area could mean serious profits if you decide to sell down the line. These are all important factors that you should dive into prior to buying. However, once you have good answers to all the possible questions these factors raise, you’ll be that much closer to making a solid decision.