Preparing to Buy a Home
Decision of buying a home is one of the most important decisions of the life-time of an individual.
Buying a home mainly depends on how prepared you are during the process. A lot of research and thought goes into selecting your home and then purchasing it at a suitable price. Below are a few guidelines to consider before buying a home.
Reasons for buying a home
The first question you need to ask yourself is why are you buying a house? Do not simply use reasons like 'Everyone needs a home', 'It is an investment' etc. It is not that these are bad reasons for owning a home but they should be applicable to you as an individual or family. A house is primarily a place you can live in.
Having your own home does have a number of advantages like tax benefits, investment source, etc. It also gives the owner a feeling of pride and sense of achievement. However, all these are just secondary benefits. By knowing exactly why you are buying a house, you will be able to focus clearly on the task and are unlikely to be sidetracked.
Decide on a suitable budget
Although buying a home has a tendency to become an emotional affair, you should never lose track of the financial aspect involved. Before you take the plunge, it is advisable to spend some time taking stock of your assets and available finances. Even before you start going out to look at homes, you should decide on an upper price limit. This is the most you are willing to pay for the house.
Your current budget should be the main factor in deciding the price limit. Do not be swayed by your real estate agent into buying something overpriced. The agent's commission depends on the price of the house, and it is natural that he would want a larger amount as his commission. You alone are the best judge of deciding how much you are willing to pay.
Another reason why budget is important is to have a house that you can afford to buy and still live comfortably while paying your house loan. Just because you have bought a house does not mean other expenditures no longer matter. You will still need money every month to be able to buy food, pay the bills, school fees, other loan payments, etc. You should strike a balance between paying for your house and making all your other payments. You may have to cut back on certain non-essential expenditures like fancy dinners, expensive gadgets, etc. to meet budgetary constraints.
Become familiar with the loan process
Nowadays, it is virtually impossible to buy a house outright. This is why most people purchase their house using a mortgage. This is a loan you take using the house itself as collateral. It is very important for you to understand how the loan process works. You should also be fairly well versed in the different types of loans available.
Take responsibility and do the best you can to learn about the entire process. Do not depend only on friends and financial institutions for guidance. Talk to people who have recently purchased homes to get an idea of how the process functions. Remember that all banks have their own rules and regulations. Contact different banks and find out about their loan process and rates of interest. Also, check what documents are to be submitted when you apply for your loan.
Buying a house should be a well-thought-out decision. You need to consider all the pros and cons before you make your final choice.
Jon M Starr
West Town Savings Bank
198 US Highway 9 North
Manalapan, NJ 07726