Owning a home requires much more than just savings and a mortgage. It’s essential to think about the long-term needs of a home, especially when you plan on expanding your family.
To achieve living in a dream home, you need to have a solid plan. We have gathered the most important steps you need to take before deciding on your perfect home.
First Things First: Things You Should Know Before You Begin your Search
While moving into a new home is the most exciting part of the journey of purchasing a dream home, there are some necessary steps you need to take, even before you begin the search.
Pay off your Current Home
You probably have a flexible plan to clear your mortgage. However, consider a quicker approach to paying it off. While it may press pause on your savings, it’s one of the most important things you can do to lay a foundation for owning a new home.
Establish its worth
After clearing the mortgage of your current home, you need to establish its net value. For example, if your home is worth $150,000, then you have to subtract 5% for the closing costs, as well as an additional 6% for agent fees. The end result is $133,500, which is the equity of your home. For selling the home, you can expect approximately $130,000.
“Continue with paying mortgage”
Soon after paying off your previous home, brace up and save the amount that you had previously used when clearing the mortgage. For example, if you committed to paying $1000 towards the mortgage every month, then saving the same amount translates to $12,000 annually. Doing this cumulatively for a few years will earn you a reasonable down payment (add it to previous home sale) for a modest dream home.
Expert tip: keep your mortgage payments below 25% of your net salary and within a short-term fixed-rate, to avoid high-interest fees.
Steps and Tips to Finding your Dream Home
Now that you know what you need to do before deciding to buy a new home, make sure to follow the following tips for a hassle-free experience.
Pre-approval for Loan
At this stage, you should already have the 20% down payment money with you. However, you still need to get a top-up of the remaining amount from a mortgage lender. Make sure you are prequalified and served with a pre-approval letter before undertaking any other step.
In the case of first-time buyers with no proven credit score, they will require a creditor who believes in debt-free homeownership. The lender may require verifying your financial info before submitting your mortgage for preliminary underwriting.
Best Fit for your Needs
It’s essential to determine what your needs are in a dream home. Do you need privacy and freedom? In that case, your dream home is probably a single-family home. Homes, such as these, are ideal if you have kids or pets which require a backyard to play. However, keep in mind that such houses may prove to be expensive to maintain.
On the other hand, you may opt for a condo or a one-bedroom apartment. As they require little to no maintenance on your part, they may be better suited for those who want to save money in the long-term.
Research the Neighborhood
Before moving into any home and starting any form of payment, it is important to be choosy and patient. This helps you learn more about the home in terms of location and neighbors.
Your real estate agent is the person to ask for help. Ask them about security, social services, quality schools, commute fees, and so on. On a personal responsibility, make occasional trips to check the traffic, noise, and people interactions. After all, you will spend a lot of time in this home, so it must fit your lifestyle.
Lighting up a home is your highest priority. Check whether you can do a PA Powerswitch in whichever region of Pennsylvania you live in. Be careful about choosing your natural gas supplier, compare rates, and decide on what suits you best.
Visit Open Houses
Once you are convinced about the neighborhood status, it is now time to look for homes that are on sale, as you attend various open houses. If you are the type of person who is continually committed to the workplace, you can surf for your dream home online, take photos, and forward them to a trusted realtor who will visit and advise you accordingly. Doing such a home inspection will eventually lead you to a perfect fit. Consequently, when making a buying decision, the end goal is to buy the most affordable within the best neighborhood.