7 useful Tips before buying a new house

Posted by Michael Griffin on May 16th, 2018

Buying a house is a big financial decision and commitment. In the planning stage itself, educate yourself about what you are getting into. Run down the following tips which are  important to go through a pleasant experience and not come across many surprises along the way-

1. Stick to your budget
Set a budget in the early stages when you initially plan to buy a house, usually even before you actually go around looking for houses. Today’s competitive market makes it easier for you to cross the limits of your budget but you should make sure to stick to your plan. It is interesting to note that rural buyers do not go over their budgets as much as urban buyers do.

Going over a little of your budget is not a big deal as long as you set your priorities straight. Consider what you need rather than what you want. If your life improves by having a school nearby or if access to your workplace is easier, you can exceed a little of your budget, given that it is reasonable.

2. Compare different mortgage payments
A house may be the most expensive thing you purchase in your lifetime, yet many do not spend as much time as they should to go around shopping for houses and comparing different prices. Even half a percent of difference can save you thousands of dollars over a period of time. Meet not just one but a few many brokers before you take any final decision.  Also, check your lender’s program of offering loans.

3. Keep reserves even after your down payment
You never know what happens in the future. So ideally keep a 6 month reserve after down payment. Down payment is itself a big deal, almost 20 % of the total amount. Do not depend only on the savings you have to cover the remaining balance payment of your house. Keep a separate reserve from your normal bank account. You never know when an emergency will arise, when you fall sick or when a natural disaster strikes in. This reserve also provides peace of mind.  Do not just live from paycheck to paycheck.


4. A 20 % down payment is ideal
The buyers paying a down payment of less than 20% pay private mortgage insurance (they pay a premium). The mortgage rates nowadays are of lesser rates. So, a monthly mortgage with a private mortgage insurance in some cases may cost you lesser than the monthly rental payments.

A higher down payment also reduces your risk of losing money when the market dips. You, otherwise have to pay more money than what your house is worth.


5. Be willing to walk away
Buying a house is stressful but in the end it is rewarding. You will be lucky if you find a house meeting your needs soon enough than you started looking.  But make sure no to buy a house that does meet your requirements, how much ever convincing it may look like. Stick your list of must haves and do not compromise on your expectations. Keep a wide list of your options. As you are buying a house for the long run, do not settle for anything that does not make you happy.


6. Evaluate the actual value of the house
While working with a real estate agent, it gives you the benefit of realizing the actual price of the house as he is more aware of the prices in a particular area. When you work alone towards buying a house it get frustrating and confusing at the same time. If you do not understand the value of the house and the other costs that come with it such as appraisals and inspections, it can cost you more than what an agent might have got it for you.


7. Verify all the information
Do not completely rely on the information handed over to you. Real estate agents sometimes put information in the listings that are not true or when they are not aware of facts. Also, find out what stays with the house and what does not.