4 Tips To Prepare You Financially For A New Home Purchase
Purchasing a new home is the goal of many individuals and families across the country. Given the turmoil surrounding the real estate market in the mid-2000s, few people willingly rush into this kind of financial commitment.
However, this process does not have to be a scary affair. With the right planning, and some strong tips and suggestions to guide you along the way, you and your family can purchase your first home and focus on all the truly important things, like time spent together, that make a house a home.
Plan Ahead
First, consider your current financial outlook. While you may not be where you want to be in regards to current funds and savings, having this information in hand and accurate helps ease the planning process considerably moving forward.
Additionally, if you find that you need to build a little bit of extra funds before approaching a lender, knowing where you stand can help you set up a budget and a timeframe in which to accomplish these goals.
While few people like to sit down and go over their finances, time spent doing just that can help you enjoy the fruits of your labor later on down the road.
Shop Around for Better Rates
In regards to finding the best mortgage rates on your loan, shopping around is major part of a successful endeavor. While you may have a connection with a certain bank or credit union, this is no guarantee that these organizations can offer the best rates to help fund this major purchase.
Take care to shop around and listen to sales pitches from as many institutions as possible. While this may seem tedious, listening to these offers could mean the difference in large sums of purchasing power. Passing up on this type of backing could hinder your ability to capture the home that you have always wanted.
Stay Flexible
In a similar fashion, hamstringing your purchase process by focusing on only one house or plot of land could keep you from making any purchase at all.
Throughout your shopping, consider a wide variety of homes and potential places of residence before ruling out all options in favor of just one. The reality is that you might not get your dream home on the first time around, due to financial constraints or insufficient loan amounts.
However, plenty of other homes that are within your budget and range could make fine substitutes that keep you and your family happy, safe, and comfortable.
Keep an Open Mind
Buying a home is far from easy, especially for those who don’t have mountains of expendable income or major financial backing throughout the process.
If you find that you can’t afford the down payment, or the mortgage rate is simply too high, don’t be afraid to take a step back and rebuild your plan.
Instead of making a purchase that you might regret later on, stay calm and keep an open mind to all the opportunities available to you and your family.
Definitely shop around for better rates! I always hear about people who just went to the first bank they have heard of and accepted their rates. NO!
For me, planning ahead is the best thing to do when looking for a new home. You should have a Plan B whenever the Plan A fails.
Well said Michelle, my brother recently ran into this problem when he was doing the construction loan for his new house. What he thought was a good deal ended up costing him big on the construction loan but luckily he was able to find a better deal at a different bank by shopping the rates and ended up closing his mortgage with a different bank.
That’s a good point Clarisse. I know in my case if plan A didn’t work we knew of a few other banks that would have been more than happy to have our business.
And buy less than you can afford! Just because you can qualify for a certain loan amount doesn’t mean you should do it. I’m a big proponent of buying less house than you can qualify for so you can easily make the payments even if you run into some financial trouble. This also allows you to make extra payments to retire the mortgage much more quickly, which can save you an enormous amount of interest over the life of the loan.
Totally agree Mark. When I was building my new house I was very concerned that I did not want to build to big of a house. In the end we built a house with 2150 sq ft. I could have gone bigger but why? When I retire I’m never going need a house bigger than that anyways. I’m think it’s important to look at your situation right now and in the future. When I get older and eventually retire a house that is to big will be more of a burden than anything.