Whether you are a swinging single professional, a newly married couple hoping to put down roots or expecting your first child and are in need of more space, buying your first home is both exciting and daunting. This is the biggest purchase you will ever make and the longest financial commitment you will ever take on—30 years in most cases. Buyer’s remorse is all too common, and while there are no guarantees against it, there are some ways to minimize the risk. Here are some important considerations to help you in making this important decision.
Crunch Those Numbers
No one knows your finances better than you do, and just because you qualify for a certain amount of money on a pre-approval, does not necessarily mean this is what you can afford. You need to take a hard look at your finances to determine not only what you can truly afford, but what you feel comfortable spending on a mortgage—you may be able to technically afford a particular house, but once you start putting 60 percent of your take-home pay towards a mortgage payment every month, you may not be so happy. Do not forget about other expenses, such as taxes and insurance; you also have to remember that you are now responsible for paying for maintenance and repairs, not a landlord, so it is good to budget for some sort of savings accounts for home-related issues if possible.
For the next several weeks or more, track your income and spending to get an idea of what you are working with. Taking the time to make this budget will not only help you avoid getting in over your head, it will help you focus your housing search more effectively—no wasted time looking at houses you know are out of your reach.
Your Wish List
For most people, our dream home and the home we can afford are not the same; it’s okay, though. It does not mean that any home you find will fall short in your eyes and that you are destined to live in disappointment. When searching for your first home, it is important to make out your wish list of all the things you want and need in a place. Of course, it is best to make this list after you have figured out what you can spend on a mortgage. Take a look at different homes in this price range to get a feel for what is on offer. This will keep the wish list ‘’realistic.’’ You may love a renovated kitchen, but if you know it is unlikely on your budget, you will avoid disappointment or fruitless searches.
When it comes to the must-haves, and you are buying a house with another person, it is important to make your lists on your own and then compare. There may need to be some compromises. But, anything that is appearing on both lists is clearly important. When searching for houses, be wary of compromising on these must-haves for less important features that are merely preferred.
Get to Know the Neighborhood
There is a lot more to loving where you live than the actual home; it is easy to get caught up in loving the house without giving enough consideration to where it is located. Talk to the neighbors to get an idea of what life is like there. If you were looking at the house during the day, make sure you come back around at night. Do a test run of your potential commute and other frequent trips you would be making, such as the ride to your child’s school or the supermarket.
Kelli Cooper is a freelance writer who blogs about all things real estate; she recommends you follow the link to compare rates in Toronto at Kanetix.