Whether you are a first-time homebuyer or have been through the process before and are looking to relocate, upgrade or downsize, the home-buying process can be a stressful one. It involves a lot of people, thought, decision-making and coordination. Not to mention it’s a significant financial commitment. It is important to carefully prepare for your home search so that you end up with a great house, a great deal, and a relative sense of calm about the whole process.
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Do a full financial analysis. You may have a ballpark idea of how large a house you can afford, but it is essential that you do a full analysis of expected expenses that appear over the years. Most people focus only on a monthly mortgage payment, but there are other things to take into account, such as taxes, assessments, updates, renovations and home repairs. If you are selling one house and buying another, you will also want to factor in transaction fees, moving costs and other expenses to get a full financial picture of your decision. Once you figure out your price range, be very careful about stepping outside of it, no matter what a real estate broker or seller tries to tell you.
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Surround yourself with the right team. Buying a house requires help from a lot of people! You will likely work with a real estate broker, a lawyer and maybe even your accountant. Make sure you completely trust the team you are working with. They will need to work well together and you never want to feel as though their interests are not aligned with yours. Ask friends and family for referrals for professionals they trust and with whom they have had good experiences.
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Don’t let emotion get the best of you. Buying a house is not just a financial decision. Factors that go into your choice can range from proximity to your office, children’s school, or grandparents’ house to choosing a house that you can stay in forever. That said, you still need to be aware of making a purely emotional decision. Housing payments are most people’s highest expense and taking on a fixed cost that is higher than what your budget can comfortably handle puts you at risk for financial trouble down the line. When $10,000 is being tacked on to a $400,000 house and is amortized over 30 years, it may not seem like too much of a price increase. Keep in mind that $10,000 would be considered a sizeable sum if you were making any other type of purchase.
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