The American dream, as well as anyone’s dream, includes owning a home. One of the reasons the dream is not realized is because people fail to plan for it. Real estate investment is not something that should be taken for granted. Investing in real estate can be a dangerous financial proposition. If you plan on investing in a home, there are several major factors you must examine.
There is a host of questions to consider with location. Is the home of your choice in a convenient location? If you have children, are there good schools in the region? Is it near a major highway? What is the crime rate there? What about groceries and shopping? What experiences have property valueshad there over time? Will it take long to commute to work? All these are major questions you should address when it comes to the location of your home.
When cost is mentioned most people think of mortgage. What you may not know is your mortgage should not exceed 30% of your monthly disposable income or 25% of your gross income. Additionally, the down payment should be considered. It is usually not less than 20% if you want to avoid paying for private mortgage insurance. You should also consider the myriad of items you may need to purchase. These include major maintenance or repairs, as well as fittings and accessories you may require.
Your Credit Score
The amount of interest you will pay on your home loan will be determined by your credit score. Get a credit report copy to find any negative items that are patently false or should have been removed. All small balances should be paid before you apply for a home loan. Such debts can lower your credit score and cost you the best rate possible on your mortgage.
The following is a guideline of how your credit score is rated:
- Excellent:: 740 – 850
- Good: 680 – 740
- Acceptable: 620 – 680
- Subprime: 550 – 620
- Poor: 300 – 550
Do Some Homework
The home buying process can be very exciting. The excitement may cause you to forget getting additional information on the home buying process. Before you make any purchasing decision, get familiar with all elements involved in a purchase transaction. Read a tutorial or book explaining the risks that come with owning real estate, tax rules for homeowners and the mathematics of mortgages.
When in doubt, make consultations with relevant professionals. For instance, you can consult a home insurance company to determine how much insurance you really need to carry on a specific house. Such steps will help you get an idea of what owning a home is all about and the costs involved.
Negotiate and Shop Around
Hold on! Just because you found the house of dreams, doesn’t mean it is the only one out there. If a house is on the market with no apparent reason, you need to find out why it is being sold. The best time to house shop is when you are in no hurry to get a place to live. At the same time, you should have ample time to draw out negotiations with the current owner.
There are other factors you will need to consider when you are planning on buying a home. These five are the most crucial and will determine the success or failure of your endeavor. Keep in mind that you should get a second opinion especially when you are dealing with realtors. It is also prudent to consult with the government agency responsible for property in your region. Caution, patience and due diligence will ensure you get the best home for your needs and value for money.