It is 2016-are you ready to buy a home yet? If you are (and even if you are not) these are the things to consider before you make a long commitment that would surely affect not only your financial status but also your life in general. We are talking about your new home after all.
Here are the top tips you absolutely need to know, courtesy of Kelly Phillips Erb from Forbes.
Use a trusted realtor.
It may seem daunting to deal with one but the truth is, a realtor is an alley who can help making deals, negotiate prices and navigate home inspections. Do not worry about the commission because it is something that is handled by seller. Keep in mind that a listing agent does not protect your best interest and only aims to keep both sides of the commission.
Remember that a house purchase involves a contract.
There are a lot of papers to sigh but it does not mean that you have to sign the standard contract right away. Ask for sufficient time to go through it. You can still negotiate. For example, if you want to further review your inspection, wish to waive a radon test or want to make a purchase subject to a mortgage approval, you can make that part of the deal.
Don't necessarily buy for the life you have today.
Buying a house is a long term commitment. Consider othe factors such as your current job, are you getting married or having kids. If you are not certain if it is going to be your home for a long time, think again or keep looking.
Think about commitment.
This is not just about the mortgage. If you are getting married, how do you go about the assets, mortgage payments and liability, repairs, and the like? Make sure you have everything in place. Getting a lawyer is a good idea.
Look beyond paint.
There maybe something that has to be done but always consider the cost. Brooke Willmes, real estate agent at SPACE & COMPANY in Philadelphia says, "People tend to focus on the cost of cabinets, appliances and counters but sometimes forget about the cost of labor which can double to triple the cost." The best way to look at it is to determine if you can afford it.
Buy the house you know that you can afford.
What you can afford may be different from what the mortgage company thinks. It is best to askyour mortgage broker to help you understand what's in play as thing may differ according to a number of factors including your projected income, interest rates, type of mortgage and the market.
Don't fixate on the purchase price.
Remember that it is not just about the price. The associated costs will also impact your financial standing. Think about the the cost of insurance, homeowner association fees and real estate taxes - depending on where you live, those can quickly add up. Wilmes also suggests that you make sure you're comparing apples to apples: a condo with a large fee that's priced low may be more costly than a higher priced one with lower fees while a cheap home with high taxes may cost you more a month than a more expensive one with lower taxes.
Consider your student loan debt.
Jason Griesser, a licensed Prospect Mortgage Branch Manager in PA says that if your student loan is in deferment and you're planning on buying a home, Griesser suggests enrolling in a properly documented income-based repayment plan so you have the documents your lender will need to properly assess your ongoing liability.
Don't get carried away by the home mortgage interest deduction.
Phillips says, "The mortgage interest deduction is only deductible if you itemize on your Schedule A: only about 1/3 of taxpayers claim the itemized deduction. You itemize if your deductions exceed the standard deduction: for 2015, the standard deduction rates are $12,600 for married taxpayers filing jointly and $6,300 for individual taxpayers (those rates stay put for 2016). Assuming that you do itemize, remember that your out of pocket will still be more than your tax savings (if you're in a 28% bracket, paying $5,000 more in interest will only "save" you $1,400 in taxes)."
You don't have to buy a house.
If you are not ready to buy one or if you think you are not ready to buy one, most likely, you are not-so don't. After all, there are a lot to consider including the housing market, interest rates, timing and your future plans. Think it through and then think it through once again.
