The universal need for shelter is a given. But not everyone is in the same financial position when making such a major purchase decision. So how much is enough for a house? Or even better, how much house can you afford?
For starters, if you’re scouring the market, consider checking out village greens homes for sale, courtesy of RE/MAX ONE Realty. This industry leader endeavors to make your home ownership journey a cinch. With that out of the way, let’s delve deeper into the question by discussing five pointers to help you make a smart choice.
Table of Contents
1. Know Your Comfort Zone
Granted, you want a home that’ll be the envy of your neighborhood. Who doesn’t? But there’s no sense in breaking the bank and veering into a financial crisis. Ergo, assess your financial capacity.
Review your budget to help determine how much you can spend on a house each month without sacrificing your lifestyle. While at it, find out the most a lender is likely to approve you for so you can have a clearer sense of your limits.
Your lender typically considers various aspects when evaluating your application, such as your credit score, income, and debt-to-income ratio. Note that although you may qualify for a certain amount, you may not need it to lead a comfortable life. Besides, your finances will thank you for living within your means.
2. Evaluate Home-Related Costs
Consider the one-off and ongoing costs associated with home ownership. One-off costs include the initial down payment and closing costs, such as loan origination fees, appraisal fees, title searches, and insurance. Typically, you’ll pay these upfront when purchasing a property. Similarly, you may need to invest in upgrades and renovations soon after buying your home.
Conversely, ongoing costs include taxes, insurance, utilities, and maintenance. These expenses accumulate over time, so it’s advisable to factor them into your budget.
3. Factor in Prevailing Mortgage Rates
Research the local housing market before investing your hard-earned money in a house. If you can get a loan at a competitive rate, you’ll be in a better position to acquire ‘more house’ for the same amount of money.
Besides, mortgage rates tend to fluctuate from time to time. When buying your home, you may pay less interest over the long haul if it’s low. Also, note that even a slight variation in mortgage interest rates can impact your ability to afford a home. Hence, scope out the market, and talk to realtors in your area for a glimpse into the current rates. That way, you can bag a good deal.
4. Keep Your Credit Score in Check
Your credit score is a vital indicator of your financial health. Maintaining a good score helps lenders assess your eligibility for the loan and, if so, at what rate. It also helps them decide how much they can offer you.
Therefore, assess your current credit score and improve it before applying for a loan. And if you have other pending loans, consider paying them off before buying a house. Otherwise, saddling a new loan when you have existing debt can put a damper on your credit score – especially if you can’t make timely payments.
5. Think Long Term
Buying a house entails more than simply investing in real estate. It’s also an emotionally charged decision. When choosing a home, think about your current and future short- and long-term needs.
For instance, evaluate what you need now versus five to 10 years from now. Perhaps having a big backyard will be important when you have kids. Also, if you plan on growing old in that house, consider whether it’ll still be suitable in 30 or 40 years. In short, make a choice that best addresses your family’s needs.
When selecting a house, consider square footage requirements. How much space do you need for the family? Do you want a finished basement or attic for additional living space? And remember, the more features or space your home has, the higher its value will be.
Therefore, have a clear idea of the space you need to ensure your acquisition serves its intended purpose. Similarly, inspect the house in person before signing on the dotted line. That way, you can spot potential warning signs or determine whether the investment is worth your money.
Lastly, consult a real estate lawyer or broker for expert advice concerning the house you plan to buy. They may provide a sweeter deal than you had in mind or suggest a better alternative. Either way, their insights can help you find the right home and make a sound investment.
