Purchasing a home can be your biggest financial purchase in your lifetime. In fact, recent reports have shown that Americans have about 40% of their wealth tied up into their home. But some people may not understand everything that goes into buying a home.
Buy a home for long term- On average, you should stay in your home for at least five years to build equity.
Improve your life by buying a home, not to speculate with your money- Your home is a place where you sleep, eat, host friends, get married and ever raise your kids. It where your life happens. It’s not intended to be a place to live for a short amount of time and move to make some extra cash.
Focus on what’s important to you and your family- With inventory being so low, try to focus on finding a home you can afford that meets your needs and not get distracted by things that might break the budget.
Stick to a budget- It’s very important to establish a budget and stick to it before you even start looking.
A 20% down payment may be ideal but it’s not required- Buyers are not required to put down 20% when purchasing a home. Some loans may even allow you to put as little as 3% down with a premium. Putting less than 20% down may require you to pay private mortgage insurance or PMI.
Set aside money for improvements- It’s no secret, owning a home comes with more responsible and issues. Set aside money in case some major breaks at your home.
Get pre-approved- Get pre-approved before you start looking at homes.
Shop around to get the best rate- Compare rates from different lenders to see which lender can offer you the best rate.
Spend no more than one third of your after-tax income on housing- It’s always better to spend too little than too much on your home in the long run.
Always be willing to walk away- If the deal doesn’t go the way you want or it’s too much- walk away. There will be other homes.
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