2016 Home Buying: 3 Important Things To Think About
Posted on: 1 January 2016
With reports of credit standards being eased in 2016, it may be the perfect time to jump on the bandwagon of homeownership. If home buying is in your future this year, or you think it may be, you will want to ensure that you keep a few things in mind:
1. Be Absolutely Certain of Your Stability.
If you will be moving to a different city in two or three years, then it doesn't make a lot of sense to make a big purchase like a home. This is especially true for young professionals and millennials who travel a lot with their job. Plus, with an increase in globalization, you have no idea where a new job or even a promotion at your existing job could take you. If you are unsure how long you'll be in a particular city, opt to rent at first. It saves you a major headache later if you don't maintain roots there. If you plan to stay for five or more years and you know you love the neighborhood and all things align with your aspirations, then you can safely and seriously think about purchasing a place to call home.
2. Avoid Seeing Your Home as a Major Investment.
Real estate is seen as an investment, particularly by financial advisors. However, real estate is only an investment when you intend to buy and then turn around to flip or rent it. So, if you are buying a place where you intend to stay for an indefinite amount of time, don't look at your home as a big investment. Otherwise, you can count on being deprived of the joy that you should experience living in this home. Instead, look at it as a decision that is both emotional as well as personal – not economical. This helps you to put more of your focus on the factors that will actually make you happy, such as the schools, community, safety, and potential memories that can be made, rather than the dip and peak of the real estate market.
3. Make a Generous Down Payment.
If possible, wait until you can pay down a generous lump sum of money to buy new home. Not only will this show your lender that you're serious and potentially make your more creditworthy in their eyes, but it may garner you lower interest rates. A larger down payment will also reduce your risk in the event that the housing market dips and you need to sell your home or borrow against it. In addition, your overall loan amount will be smaller, which will lower your payments and make it a bit easier to handle each month and will reduce what you pay in the long-term since less of your money will be going toward the interest.
When you begin to search for new homes for sale, make sure to contact a realtor to make the process smoother.
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