As interest rates climb, knowing exactly how you will pay for a property is becoming even more pronounced these days. Here are some thoughts on planning to buy:
1. Start early, the earlier the better…..and well before you start looking at homes. Everyone should start thinking and planning to be able to buy a home in their early 20’s…..even if they only buy much later.
2. Clean up your credit score. Even if you’ve been paying your bills on time, you’d be amazed how many very credit-worthy buyers have issues on their credit history that they were unaware of.
3. Work with a financial planner before you seek a mortgage broker or banker: you need to see the big picture first.
4. Establish what you can afford. Your house payments and monthly housing-related costs including the mortgage, maintenance, insurance, and taxes should not exceed 28-30% of your gross monthly income.
5. Not all buyers are alike. Some are income rich and assets poor. Some may have inherited or gifted money or stock, making them assets-rich and income poor. A financial professional can help better understand your options.
6. Don’t feel compelled to buy the most expensive home you can afford: buy what you need but don’t underestimate the costs of moving and transacting. Buy that which you can grow into.
7. Allow for financial cushions. Rough financial times are almost inevitable. Hopefully, they never happen, but be prepared for them.
8. Not all financial professionals like real estate: if you take $500,000 out of your investment portfolio, you will automatically pay smaller fees to your portfolio manager. That is not going to incentivize some of them to encourage you to buy real estate.
9. Minimize the lines of credit you have. You don’t necessarily need 8 credit cards. Each time you establish a line of credit it can impact your credit score, and never establish a new line of credit while applying for a mortgage.
10. Shop around. Get a broad understanding of ALL your financing options.
11. Hire a contractor or qualified professional to give you a true understanding of the quality of the property you plan to buy to understand future replacement or repair costs. Factor them into the equation.
12. Speak to your accountant to fully understand the tax implications of your purchase from a tax perspective. High real estate taxes can be an enormous expense unless they deliver outstanding cheaper schooling for instance that might cost a fortune elsewhere with lower taxes. Likewise, high real estate taxes in a low-tax state can be of benefit in the big picture.
Always work with a real estate professional that represents your best interest and can guide you through the often very complicated process of buying a home.
A leader in our market and consistently ranking highest in customer satisfaction, The Pacitto Group is a local name in trusted real estate. A local expert in navigating the world of real estate and elevating the style and story of your home