Getting into the real estate market can be a very scary time. It doesn’t matter if you are trying to sell your home or if you are buying a house, the process is exciting and scary both. Many buyers share the same fears. If you are selling, be prepared for these.
The most common fear of buying a house is if you can actually afford to buy. The first step to buying is to determine if you qualify for a mortgage loan. Don’t start looking to buy a home before you get qualified through a lender. A lender will look at your credit, your income, and your monthly financial responsibilities to determine how much money you can qualify for a loan. This doesn’t mean you need to find a home at the amount of money you qualify. The more money you qualify for a home loan means the higher your monthly payment will be. You should know your finances well enough to know how much money you could afford to spend on a monthly payment.
When you qualify for a home mortgage and you begin looking, keep in mind you will need to have a good down payment to put down on the purchase. The common requirement for a down payment is 20 percent of the cost of the home. A bank wants to lend money to people who have less than 36% debt to income ratio. All monthly financial obligations should be included when applying for a loan. These things include child support payments, student loans, credit cards, car payments, alimony, etc.
Closing costs are another obligation you will have when buying a house. Look at your savings and be sure you have enough money for closing costs. Closing costs include attorney fees, transfer fees, and more. The National Association of Realtors says the average cost for closing costs is approximately 2%-7% the cost of the home. Additional money is required as a cushion also. If you move in the home and find something happens unexpectedly like your car breaking down, you could be in trouble. Having money to buy a home doesn’t mean draining your account entirely.
Another fear people buying a house have is if they will have buyer’s remorse. There are always things you will find with a home you want to improve or that need repair. There is no perfect house unless you designed it yourself and paid a builder to build it for you. Even in a situation like this, there are still issues. Buyers often have to give up things they want when they buy a home. It is best to begin with a small house on your first purchase, build equity in the home after paying on it for several years, and then move into something closer to your dream home. The big picture is that you will own your own home. There are tax benefits of owning a home and you are building equity. If you are lucky, the house will build equity also.
Some people buying a house know they are not capable of fixing simple repairs around the house. If you need a handy man then you may need to hire one. However, you do need to start somewhere to learn how to fix things. Your local hardware store may offer classes. You can invest in a handyman’s guide to fixing minor repairs and even ask friends to give you pointers. You will have repairs and it buying a house means it is time to learn how to fix them. If you just can’t, hire a professional.
One big fear people buying a house have is if they need to move. If you are thinking about buying, you shouldn’t plan on moving for 3-5 years. You need to build equity in the home and for the value to go up. It is difficult to build equity in a home the first couple of years. The best way to build equity is to pay a little more on each payment each month. Most payments the first few years are primarily interest. Try not to move within the first 5 years or you will not make any money on the sale. Most people lose money.
