5 Things To Consider Before Buying A House
Buying a house can be exciting, but it can also cause stress and long-term consequences if you don't carefully consider the purchase. Here are five things everyone needs to consider before making an offer on a house.
Down Payment
Your best choice is usually to make a 20% down payment, because then you don't need to pay mortgage insurance, but there are other options. Many states have down payment assistance programs to help you get into a home, and there are also nationwide grants available for those who qualify.
Monthly Payments
Remember that the mortgage premium isn't your only cost. Other costs include:
- Property taxes
- Insurance premiums
- Utility bills
- Mortgage insurance
Take these into consideration when shopping for a home. The mortgage payment itself might be less than your current rent, but is it still reasonable when combined with all the other costs associated with owning a home?
You will also want to think about future payments, which can be impacted by job security or inflation. It is much harder and often more financially damaging to let go of a home than it is a rental.
Interest Rates
While you shouldn't rush into buying a home just because of the interest rate, it's important that you keep an eye on them throughout the process.
If you can afford a $300,000 house at 3% interest, you can only afford a $237,000 house at 6% interest.
Taxes
Many people don't realize that the amount the prior owner was paying may not match the amount they will be paying. Some states can only raise taxes by a certain percentage each year for existing owners, and others don't change the tax rate at all except when the house is sold. Before settling on a house, research how and when your state calculates taxes so you don't get an unexpected bill.
Location
Because a house is the biggest purchase some people will ever make and you will likely live there for five to ten years, make sure you know what you're getting into. Research neighborhood crime, local schools, and any nearby environmental dangers before picking out the perfect house.
