With the economy keeping prices in check and interest rates at historic lows, this is an ideal time to buy your first home – if you tread carefully amid such a momentous transaction, according to Forbes.
Here are some tips to ensure that you are making the right move and getting the right price:
- Make sure buying is for you. Consider whether rents are cheap and homes costly in your community, whether you are you planning to move in the next year or two and if your job situation is questionable. If you answered ‘yes’ to any of these questions, buying is probably not a smart move. The days when you could flip a house quickly and at a profit are history.
- Do a credit check. Before you spend all of your free time shopping for the home at your dreams at a bargain rate, have cash on hand for a down payment and a mortgage lender who is willing to provide you with a home loan at an affordable rate. Get preapproved to expedite the closing of your purchase, which could take months otherwise in this market.
- Consider a down payment and the alternatives. Speaking of down payment, today it’s best to have 20 percent up front, which instantly adds equity to your house and lowers monthly payments. You also know you can afford to buy a home when you have saved enough for the down payment. Without it, you’re looking at forking out even more in your monthly payment for private mortgage insurance.
- Be realistic about costs. Shop for a home that won’t gobble up most of your income each month. Besides the mortgage and principal payments, buying a home means paying for insurance, maintenance and real estate taxes
- Don't cut corners on inspections. It’s worth paying for a good home inspection, especially if you're buying a foreclosed home. The home inspection is key to understanding the condition the home is really in and whether you’ll have to cough up a lot more to make it livable.
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