Thinking about buying?

If you are thinking about buying a home, there are many considerations. Here are a few.

How long do you plan to be in the home? Are you going to grow out of it quickly, get transferred, change jobs or take on family members?  The average homeowner today stays in their current home for about 9 years. Usually enough time to realize appreciation and write-offs to be considered a sound decision. You should commit to staying 5 years. If you do, in most markets you should realize a profit. So be ready to put down some roots.

What can you afford? Most people can qualify for more than they are comfortable spending. There are many online mortgage calculators available. Work out that payment before you do anything else. Don’t forget to add in insurance and taxes. Nobody wants to stay up nights worrying about their payment.

Only 3% of people have a written home budget. Be in that 3%. And figure out a “survival number” an amount that you need to get the basics paid each month. (This does not include Lattes, expensive dinners and clubs. You can survive without those. Sorry)

Talk to a trusted mortgage advisor. (If you don’t know one, call me. I have a superstar lender who will care about you)

GET EVERY PIECE OF PAPER THE LENDER ASKS YOU FOR. UPFRONT. Before you start looking. Do it first. Approximately 70% of potential Buyers don’t do this. They have a talk with a lender, get put through desktop underwriting (an automated program used by lenders to qualify for Fannie Mae guidelines) and go out looking. If and when they get an offer accepted it’s a scramble, under a timeline, to get the documents to be fully underwritten by a human underwriter. Problems can arise. It can cause extensions or worse, you can be denied the loan after sending money on appraisal and inspections. Getting approved is a pain in the neck. Do it completely without the pressure of an escrow timeline ticking. You have to do it anyway. The listing agent will understand the value of you having done it. And things will go much more smoothly during a stressful time.

The house: figure out what you need and what you want. What is a deal killer and what isn’t.  It will save you time.

Having a “rolling top 3”: 3 homes that you like the best, ranked. Even if you are just looking online. If a new home come up that becomes number 1 drop number 3 and move the other 2 down.  You can remember 3 homes. It is very difficult to remember 10…or more. It will make you more clear and able to make decisions.

Use the 85% rule. If a home has 85% of what you’re looking for you should probable take a swing at it. (That number could change depending on what is happening in your market) Don’t expect 100%. It’s probably not there.

Buying a home is a big, expensive, stressful event. Have a plan. Execute the plan. It won’t guarantee success, but it will increase your chances. And likely make the experience much better.

Reasons to be a homeowner

There are many reasons to purchase a home. If you're reading this you may have already decided to do it. Its a big decision and it can be a tough, emotional process. In any case I want to outline just a few specific reasons that may help you take the necessary steps.

First, it is forced savings. You're not just paying to live somewhere. You are paying for an asset that will increase in value over time. According to the Federal Reserve's Survey of Consumer Finances a homeowners net with is 44 times that of a renter. And Pulsenomic's Home Price Expectation Report estimates that a family that purchased in early 2017 will build more than $48,000 in family wealth over the next 5 years.

Second, there are tax benefits. Interest on your payment is deductible from your taxable income, and for the first several years a large portion of your payment is interest, dwindling slowly as a portion until in the 30th year your payment is almost all principle. Early on you can write off most of your payment. The new tax law (2018) had made some modifications so check with your tax professional.

Third, you can lock in your monthly housing cost. If you get a fixed rate mortgage (which I strongly advise in almost every case) your payment will not go up, assuming your insurance or property taxes don't go up.

Fourth, it's an investment you can live in. Pretty tough to beat that.

There are many more reasons for owning a home but these four top my list. It is a process though, and it requires education.