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Being a first-time homebuyer is exciting. But it can also feel overwhelming, particularly when you see the value of homes soaring all across the US. and the available homes flying off the market as soon as they’re listed. With real estate trends like these, you might be tempted to make an impulse purchase that could hurt your lifestyle and financial goals. Resist the impulse!
If you’re ready to buy your first home, you need to consider various factors that can impact your lifestyle and finances. From location to neighborhood to the home style and design, every detail comes into play. That said, here are the critical factors to consider when buying your first home.
When buying a house, location is perhaps the most crucial factor to consider. A growing or developed area will always be an asset no matter how the property market fluctuates in the future. Plus, you can always renovate your home if you feel it’s out of fashion, but you can’t make a lousy location look good.
The bottom line is a great location is a lucrative investment. You also want to buy a home in an area that allows easy access to the places you frequent the most (work, school, shopping, recreation, place of worship, etc.)
Before you embark on your house hunting journey, make sure you know how much you can afford. That doesn’t mean the maximum you can borrow but the maximum you’re willing and able to pay each month.
So, what’s the best ratio to use?
Generally follow the 25% rule to determine how much you can afford to pay monthly. According to the rule, your monthly housing costs (including taxes, insurance, HOA fees, etc.) should ideally be no more than 25% of your monthly take-home pay. And don’t just consider the direct costs associated with the property. It’s also important to consider indirect costs related to the property, such as upkeep for extras such as a swimming pool, fancy heating and cooling systems, etc. But DON'T GUESS. That's what we're here for. Contact a DRMC Loan Advisor and we will help you take the guess work out.
When buying a house, it’s crucial to consider the basic infrastructure of the area. Before you commit to buying, find out the state of the existing infrastructure.
Lack of good infrastructure and utilities, like telephone and internet connectivity, can increase the cost of living and impact your lifestyle goals.
Remember, your house doesn’t exist in a bubble. It’s a part of a larger community that you’ll live in until you decide to move out. That said, it’s crucial to find a secure neighborhood that will meet your needs before buying. Start by checking the crime rate in the neighborhood you intend to move. A lot of this information is available online, and websites like mylocalcrime.com can be very helpful. Such sites can provide you with reports on crimes reported in the neighborhood in question. Next, take a walk. Go a few blocks in every direction and find out more about the neighborhood. Find out what’s going on in the yards? Are the houses and amenities to your standard? If what you see makes you uneasy, consider buying a home elsewhere.
Your lifestyle needs should also dictate the size, style, design, and other must-haves in your first home. For instance, if you’re a homebody, you’ll need a cozy living room. Is your need for more space imminent—a new baby on the way, an elderly relative you need to take care of? All these factors can play a role in your choice of a home. Your lifestyle habits can also dictate how much you can spend on a property. Do you take a weekend getaway every month? Or invest in expensive artwork? You might have to do away with some of these habits if you bought a home based on a 45% debt-to-income ratio.
There you have it! The five critical factors to consider when buying your first home. Considering these factors can prevent you from making costly mistakes that can lead to frustrations and financial problems down the line. We hope this piece will help you make a more informed buying decision. Contact a DRMC Loan Advisor and we will help you with the process.