Determining whether buying a house is the right move is difficult without knowing the facts. Taking the following steps can be helpful.
Step 1. Finances
Find out how much you can afford. Consult your banking institution or a mortgage company to calculate how much you can borrow. The amount you can borrow determines the price range you can afford.
Calculate the actual cost of living in the house. Besides the mortgage, you need to take into account property tax, insurance, utilities and a budget for ongoing maintenance of your new home.
Calculate the tax saving due to interest payments. Now you have the finances figured out; it is time to move to the next step.
Step 2. Needs, Wants and Desires
Sit down with your family and make a list of Needs, Wants and Desires items.
Under “Needs,” add features in the house that you can not live without. These are non-negotiable. Under “Wants,” add features that you would like to have in the house, but you can live without if your Needs are met. Under “Desires,” add items that are desirable, and will be a bonus but are not determining factors. There is no right or wrong way to make a list. Just to get you started, consider the number of rooms, a number of bathrooms, the location of bedrooms (first floor or second floor), square footage, one story or not, the size of the backyard, pool/spa, kitchen equipment, etc…
Besides the features of the house, the features of the neighborhood are important too. For example, specific school district, distance to work, and any other requirements you “Need” or “Want” to have.
Now we are ready to go to step 3.
Step 3. Have a free consultation with a realtor
An experienced realtor is an invaluable source of information, guidance, and support for a home buyer. (Don’t worry about the price of their service, in most cases, they are paid by the seller). Take your list and your budget with you. You can modify the list as you work with the realtor: you might find things that you have not thought about. He/she can tell if what you are looking for is realistic considering your budget, taking into account the current market. If so, congratulations! If not, consider how you may modify your list. Otherwise, you might prefer to postpone buying a house until more favorable conditions arise. Whatever your decision, you will know that you have acted on good information and sound advice.
Realtor.com, Zillow & NAR