Your home can say as much about you as your outfit. And just like shopping for a tasteful, classy wardrobe, shopping for a new home has its challenges. However, like choosing new clothes, there are a few helpful hints that will save you loads of time and trouble.
Choosing the Right Style
When choosing a mortgage, research the different types available and realistically consider which will fit your budget and lifestyle. Furthermore, gaining a complete understanding of precisely how the various mortgages work should help you make a better decision. For instance, even though the thought of lower monthly payments is tempting, unless you are anticipating a steady increase in your income over the term of your mortgage, an adjustable rate mortgage may not be the best option for you.
Furthermore, know your credit score and credit history. Months before you go look at any properties, check your credit history and make sure it is accurate. By federal law, you are entitled to a free credit report every 12 months from three designated consumer credit reporting agencies. These free credit reports can be requested by mail, phone, or the Internet through the Annual Credit Report Request Service (Source: annualcreditreport.com). If your credit history is less-than-perfect, you may consider consulting a credit counselor to help you manage and budget your finances to improve your credit score. You will find it troublesome to have to clear up inaccuracies on your credit report while trying to get approved for a mortgage for your dream home.
Finding the Right Size
Look for a home that suits both your family and your budget. Figure out how much you can afford and try to buy a property that is within your budget. The rule of thumb is that you should aim to spend about a third of your gross annual income on housing. Another way to figure out an approximate housing budget is to deduct your regular necessary expenses (such as food, utilities, car payments, etc.) from your gross income. This should help give you a good idea of how much you can afford to spend on monthly mortgage payments. You need to also remember that the cost of a home includes other costs such as maintenance and utilities which tend to correlate with the size of the home. Moreover, it might be wise to try to leave room in your budget to include saving for emergencies or other unexpected expenses.
The "Little Black Dress" of Properties
Lastly, despite the popular mantra of "living-in-the-moment," try to keep a property's future resale and equity in mind when looking for your new home. While a vogue home or location may be all the rage at this moment, choosing a classic, timeless home will pay off in the long run, especially if you intend on tapping into your home equity at a future date through a home equity loan or line of credit.
