Buying a house should never be entered into lightly, and often many potential buyers may not realize just how much work it actually takes or understand the process involved. Doing as much research as possible can help determine exactly what is needed to put you in the best possible position to make a purchase.
Here are ten great ways to help you identify the point at which making a home purchase becomes feasible for you:
1) Little to no credit card debt
When you're trying to get a mortgage, perhaps the most important aspect of doing so is getting your credit card debt reduced as close to zero as possible, according to Money Under 30. That's true for two reasons. First, the size of your credit card balance is relative to your limit and makes up a significant portion of your credit score. Second, lenders look at the debt-to-income ratio. As long as you're carrying relatively small balances from one month to the next (or ideally, not carrying a balance at all), you'll be in good shape.
2) All other loans paid off
One of the biggest hurdles for the millennial generation, when it comes to being financially capable of buying a home, is student loans. It may not be wise to try to buy until your loan balance is under control, but that doesn't mean they have to be paid off in full. However, they certainly need to be somewhat small relative to your income.
3) Tens of thousands of dollars in savings
If you're trying to buy a home in today's market, you'll almost certainly need to make a sizable down payment. While it's possible to get mortgages with down payment requirements as low as three percent, the added long-term expense could end up costing you significantly over the life of the loan. Making as large a down payment as possible is going to keep your borrowing costs down.
4) A rainy day fund
In addition to the money that will go toward your down payment, it's vital to have some additional money saved just in case something goes wrong with the home, according to Mint. As a general rule, having about $1 per square foot – or one percent of the purchase price – in the bank will help cover some basic expenses you're likely to encounter after your home purchase.
5) A long-term plan
Whether you're buying a home for a whole family or as a single person, you need to know what your situation is going to look like two, five, 10 or even 20 years down the road. That will influence a lot of decisions about the kinds of homes you're looking to purchase – i.e. not buying a small one that you'll have to move out of in a few years when you have kids – and how much work you'll have to put in to make sure your finances are in good enough shape to do so.
6) Reliable income
Lenders also want to make sure you're going to be able to keep up with your mortgage payments in the long term, so a steady job is a must, according to Credit Sesame. While no one can predict their employers' future with 100 percent accuracy, it might not be a good idea to go house hunting at a time of turmoil. As long as you're fairly confident in your position, shopping should be no problem.
7) A comfortable cushion
One issue some homeowners encounter after buying a home is they've pushed themselves so far financially trying to get ready for the real estate sales process, that they come out the other side in rough financial shape. Being "house poor" means people own a house but otherwise struggle financially because of the cost of that property. You'll need to make sure you're not buying too much house or else risk running into other financial problems, even if you can technically afford the mortgage and other costs.
8) An understanding of what constitutes affordability
Along similar lines, it's vital to not only factor in the cost of the mortgage, taxes and so on, but also other expenses. This may include higher electric and heating bills that come with living in a bigger space, more costly insurance coverage (especially if your new home is in an area prone to flooding) and so on. Sitting down and doing the math around the true cost of homeownership will help you avoid being house poor or running into expenses you might not have realized will crop up.
9) A list of must-haves and nice-to-haves
When people actually start shopping for homes, it can be easy to fall in love with certain properties, according to Forbes. However, while it would be nice to have a state-of-the-art kitchen with stainless steel appliances, it's probably going to be expensive and not necessary to your happiness in the home. Having a list of things that you will absolutely need out of your new property – big backyard for the kids, a finished basement for a home office, etc. – will sway your choices and help you get a better idea of what you can actually afford.
10) A talented and experienced agent
The key role of real estate professionals in every portion of the process cannot be overstated. They will be able to help first-time buyers as well as those who have previously been through the process get as prepared as possible so they can maximize their understanding of the value they get out of buying a home. Experienced agents have likely seen it all and can help shepherd any client through a sale – as either buyers or sellers – with ease.
Buying a home is usually going to be the biggest purchase you will make in your entire life, so it's important to put in a lot of legwork – over a period of months or more – to ensure things go as smoothly as possible at each step of the shopping process. That, in turn, will help you feel more confident in your ability to make a purchase and know that you've done everything right.
We have 8 tips you need to ensure your move is flawless.
1. Set a Budget
It's no secret that relocating costs can get out of hand. When considering relocating, it's important to set a budget. This will help you to prioritize what is necessary and what isn't when relocating.
2. Create a Plan
Relocating can be overwhelming and chaotic. For these reasons, it's important to create a plan in advance – when you plan to relocating, how you are having your furniture and boxes moved and any other tasks that you feel are important for a smooth transition.
3. Create a Moving Checklist
To stay organized, create a checklist of all of the tasks that need completed before, during and after you've moved. This list will help you to stay on task and prevent you from forgetting any small, but important detail.
It can potentially be a costly decision to wait to declutter your home until after you move. When you declutter prior to moving, you can possibly sell and make money off of the unwanted or unused items in your home. Decluttering also means you'll have less to move later!
5. Pack Early and Pack Efficiently
One question often asked is, how soon should you start packing before you move? The answer is always the same – as early as possible. The sooner you begin packing, the less stressful the process will be, especially if you're moving a long distance. Start with rarely-used house items and work your way to your common, everyday materials to prevent cutting corners at the end. This will help to reduce the chances for broken goods or misplaced items.
6. Label Every Box with its Destination and Contents
As you pack and seal up each box, write a brief list of its contents and the room they are intended for. This way, when you're moving in, you'll be able to deposit your boxes in the right room and you'll know exactly what is in each box.
7. Change Your Address & Transfer Utilities
Before you move, make sure to change your address and transfer all utilities at least two weeks prior to moving. This timeframe ensures your utilities will be transferred on time for your official move in date and allows for your address change to take effect, so you don't miss any important bills, statements, packages and other mail.
8. Pack a Moving Day Essential Box
Don't move to your new home without a moving day essential box or bag. This box should contain anything and everything you might need on moving day and the following few days. Essentials could include items like toothbrushes, medications, toiletries, trash bags, a tool kits or cleaning supplies.