What Do You Need to Know Before Buying a Home?
By The Editors
PlannedMan

Home-ownership is a kind of personal Everest. Here are the five secrets you need to know before starting your climb.

What Do You Need to Know Before Buying a Home?
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Highlights


You can say goodbye to your landlord...

...if you're ready to say hello to your mortgage broker.

Buying a home has always been the Mt. Everest of adulthood.

 

Buying a house requires mastering the essential adulting habits.

Many dream of climbing to that peak, and many actually get there, but very few do it without oxygen.

That’s because buying a house requires the holy trinity of adulting habits:

  1. Disciplined saving for years before you even make an offer
  2. Controlled debt (watch that credit score, brother)
  3. Deliberate lifestyle stability.

But that’s just the obvious stuff that any armchair expert could tell you about.

What is far more important, potentially life-saving even, are these five secrets you need to know before climbing your own Everest.

Here goes:

  1. Go well-armed. First-time home buyers may be eligible for state programs, tax breaks, and federally-backed loans if you meet certain criteria. These are all good things.
  2. Lighten your debt burden. When it comes to mortgage approval, your ideal debt-to-income (DTI) level may need to be 36 percent or lower; or you can try some or all of these DTI hacks.
  3. Equity helps. If you have to put down less than 20 percent of the agreed purchase price of your new dream home, you will probably have to pay Private Mortgage Insurance (PMI) monthly until you get to 20 percent equity in the home. That’s real money out the door on top of the mortgage every month you may be able to avoid paying, if you can scrape together more cash for for the down payment.
  4. Get a bulldog inspector. When you’re the buyer, make sure you hire the meanest, crankiest home inspector you can find, because this guy might find flaws in the home no one else can see that could lower your final price. (Bonus tip: When you’re the seller, do you best to get the kindest, sweetest home inspector money can buy.)
  5. Killer monthlies. It’s great that you love the neighborhood! And great that there are excellent schools! And there are world-famous monthly key parties! But don’t forget to consider the cost of your annual property taxes and any monthly HOA dues.

Two other things to keep in mind:

—Just because you qualify for a million-dollar mortgage doesn’t mean you have to buy a house with a million-dollar mortgage; in other words, just because you can afford to buy more house than you need doesn’t mean you should buy more house than you need. 

—Sometimes it’s the littlest things that matter the most. For instance, before you buy, make sure you look into things like how hard is it to get a seat at the friendly, local poker game in your new neighborhood. Our recommendation: Given the size of your new mortgage, look for a 10-10 game, with a buy-in of $10 or less and players who are ten or younger. 

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