Whether it is a condo or a mansion, buying a home for the first time is a scary and exciting thing. Funnily enough it seems to captivate the imaginations of everyone, as evidence by the popular (and great shows) House Hunters and Property Virgins on HGTV. And why wouldn’t it be fun? Huge sums of money being moved, a new place to live, not to mention the shopping around. It’s a pretty cool deal. But what place really fits you? Its like shopping for clothes, perhaps an extremely nice suit. If you're going to get one, its got to be perfect.
As you would expect not every abode is for you. Take for instance you need to buy a shirt and you’re a size large. You aren’t going to go to the store ask for one large shirt and take the first thing they hand you. What style do you want? Crew, collared, or V-Neck? You have to go through the racks, find your style, maybe check the material, is there a sale going on? It’s the same for a house. Not all 2000 sqft 3 bed two baths are created equal. For all you know one has 1000 sqft of closet space while the other has that 1000 sqft in a finished garage! Do you want a cape, or a more modern style? Also what features do you want? What’s most important to you? These are some of the preliminary questions to ask.
Now that you have the style and size down its time to look at price. No doubt you had a budget to start with. But how does your ideal image of a house fit into that budget? Moreover, how did you come up with that number? So how much room can you really afford? Perhaps you figured 350,000 was your number, but the banks may not see it that way. A mortgage is an odd thing, taking into account your current loans, debt, credit, even how long you have worked at your current job. With that in mind, the bank could lend you much less than you think, or sometimes even offer you more than expected. Both of these situations can cause problems in your search. Going back to our clothing store analogy, if you went to a store thinking you had fifty dollars and it turned out you really only had twenty five, your search may change. By the same token, if you figured out you had an extra fifty bucks, would you maybe spend more than you originally thought just because you could? If you have a number in your head before the loan, try and stick to it. For the most part, a bank will hopefully come close to what you’ve calculated, but in the event of an overage, try not to bite off more than you can chew. Be comfortable with that monthly sum because—hopefully—it won't be changing any time soon (unless of course you can lower it). Sometimes it may even work out that you needn’t spend that much to begin with. If perhaps you are a young couple who doesn’t need much space, you may find that buying a larger home isn’t worth it at the moment. Or, perhaps you find a compromise that winds up being cheaper—like going to Marshalls or TJ Maxx and finding almost the same designer shirt for a fraction of the price.
Stepping back from the actual price, there are a number of things to consider with that monthly payment. After all, most of the time you won't just need to pay the mortgage, you will have to pay utilities, taxes, cable, insurance etc. If you’ve decided on a condo, find out if they have HOA fees. Is there any aspect of your place-to-be that could catch the eye of an inspector you want fixed? Or is there any part you may want renovated? Thinking ahead can pay big in the financial long run.
So, you have your money, you're in the store, at the clothing rack and you're finally about to head to the cashier. Well hold on a minute, are you sure your getting the best deal on those pants? Look around before you decide on purchasing that exact pair from the store. Much in the same way, consider your differing payment options and financing. You may be able to get a better deal on your mortgage if you take the time to investigate. Much in the same way, make sure your real estate agent is up to snuff. Are you going to send your not very stylish, lazy friend to pick clothes for you or are you going to send your super stylish crazy controlling but you love them anyway friend who always gets the best deals. Make sure your agent knows your style and has your best interests at heart. When it gets down to negotiations, they’re your new best friend.
At this point the struggle is almost over. You're checking out and you can’t wait to get back and put on your new outfit. But suddenly the outfit’s price goes up, or the shirt only comes sleeveless. What then? Do you still want it, or should you return to the search. Negotiations can be even more stressful and tiring than looking for your place, especially if there is competition for the same house, or the sellers won’t negotiate. Obviously you want one thing and they want another; you want to save your money and get the most out of your deal, while they want to gain the most money and give the least. Be ready to be fair reasonable, and, if need be, walk away. Nothing is worth going bankrupt for, so stick to your budget. Make sure to build in certain things like a home inspection, but sacrifice the less important—is a 17 head sprinkler system really a make or break install? In the end, hopefully you end up with that stylish new look everyone is jealous of, and you can be happy in the place you now call your own.
Just make sure to protect your investment!
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