Stuff You Need to Know About Buying a House

It is significant to know the pros and cons of buying a house before taking the plunge.

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Advantages of Owning a Home

First, let’s take a look at some of the advantages of buying a home. The most obvious benefit is that it’s yours. You can paint your kitchen pink, change the landscape, install a basketball hoop, or turn your unfinished basement into a movie theater. Provided you work within any building or zoning regulations, you can do almost anything you want with your home.

Another major benefit of owning a home is that some of your monthly mortgage payment comes back to you in the form of equity. When you pay rent, you will never see any of that money again. On the other hand, part of your mortgage payment will partially be applied to the loan principal, which builds equity.

Since your home can become an asset, you also have the potential to make money if you can sell it for more than you originally paid. In some cases, this profit may even be tax-free. In addition, you may be able to tap into the equity of the home while still living in it in order to make improvements or consolidate debt.

Finally, let’s not forget that there may also be additional tax benefits from owning a home. In many cases, the mortgage interest and property taxes you pay are deductible, which means you will be lowering your overall tax burden.

Source: https://www.thebalance.com/things-to-consider-before-buying-a-home-1289842

The True Cost of the House

The mortgage is the largest part of the price of a home, but it’s not the full cost. Educate yourself on all the costs associated with buying and maintaining a house to make a well-informed decision about what you can truly afford:

Mortgage: The rule of thumb is that your principal, interest, tax, and insurance payment (PITI) shouldn’t exceed 28%, or sometimes 30%, of your gross income.

HOA fees: Many neighborhoods and communities have Homeowners’ Associations (HOA). Depending on the property type and the total services provided, the HOA monthly payment can vary greatly, ranging from $200 to over $500.

Taxes: Prior to the recent GOP tax overhaul, most property taxes and mortgage interest payments were tax deductions. However, there are now various limits on the amounts and types of deductions, so it’s best to consult a tax advisor or do some homework on your own to assess what, if any, the deductions will be for your situation.

Basic home maintenance: Every home will need some level of upkeep, items such as clearing gutters, air filters and simple items such as light bulb replacement. A popular estimate is that annual maintenance will cost about 1-3% of your home’s purchase price.

Appliance replacements: Appliances like dishwashers, laundry machines, and refrigerators have a lifespan of around 9-15 years, so factor replacement timelines into your budget.

Major repairs: Similarly, your house requires periodic maintenance or replacement of major structures. Unlike a new fridge or water heater, which may cost less than $1,000, a new roof, windows, or HVAC system can cost tens of thousands of dollars.

Source: https://credit.org/2018/04/27/top-5-things-to-consider-when-buying-a-house/

Will You Live in This Home Forever?

Sometimes it makes sense to spend more on a home if you plan on living in it for the rest of your life. If you don’t, however, you need to think of your home from an investment mindset.

Ask yourself questions like “will I be able to sell this when I’m ready to move?” and “could I potentially make money off the sale of this home?” These questions can help you be objective during the home buying process.

If you plan on living in your home for a few years and then renting it out you need to research the rental market of the area before buying. The location of the house can make a huge difference when it comes to being a landlord.

Source: https://thecollegeinvestor.com/15755/3-things-to-consider-when-buying-a-house/

Make sure all renovations are up to code.

If a renovation was done without a permit, it might not have been done right. No permit means that the work was not reviewed by an inspector, something you do not want in your new home. You might be wondering why a seller would bother not getting a permit for work done on their home. There are usually three reasons for this:

By obtaining a permit for an addition, you will pay more money in taxes because your assessed value will go up with a larger home.

It costs money to get permits. When you put on an addition, you are typically paying for permits for electrical, plumbing, and the general building inspector. Many owners just don’t want to bother paying the fees.

Pure laziness. This is such a sad excuse, but that is what happens with some people who don’t want to take the time out of their day getting permits for work.

Buying a home without necessary building permits will become your issue in the future when you go to sell. It is advisable that you ask the seller to get the permits taken care of before you buy the home.

Source: https://www.maxrealestateexposure.com/things-to-do-before-buying-house/

The Size of the House

Is the size of your prospective house appropriate to your family’s needs? Or…is the house you’re looking at more of a mini-mansion with 6 bedrooms and 5 bathrooms….for your family of four…?

Just 30 years ago, the average new home was built with 1,700 square feet. Today, new construction homes average more than 2,600 square feet! And, the size of our families have gone down!

When you’re looking for your next house, be careful not to fall in love with a house just because it has a ton of space.

More space often means:

A more expensive home, which will force you to…
Work more hours…which means you’re…
Spending even less time in the home that you supposedly love!

If you truly want to enjoy your home, be realistic about its size. One spare bedroom is totally fine. But if you suddenly have two or three…plus a workout room, a man-cave, and a pole barn…you might actually become less happy because of the space and all that stuff that’s taking over your life.

Source: http://lifeandmyfinances.com/2018/07/top-10-things-to-consider-when-buying-a-house/