When thinking about all the things to know before buying a house, most people think of finances. Yes, buying a house is an expensive thing that most only do once. As housing becomes more expensive in places like the United States, it will make it that more important to familiarize yourself with all the things necessary to know.
Considering that not everyone is an expert on the topic, we figured out an article is necessary to explain all these things. So if you’re thinking of buying a house, there are 4 things to know.
Is Your Job Secure?
As the economy grows, so do our paychecks. Everyone benefits from a strong economy. But that doesn’t mean your job is safe at all times. The first thing that everyone should ask themselves is whether or not their job is secure. Will you be in a job in 10 years? Are you going to be in an employment position while repaying the mortgage?
These are all questions that must be answered before you decide to buy a house. And while there is no definitive answer, you have to work and make sure that your employment position is secure.
Do You Have Enough For A Down Payment?
The next thing to know is that you’re supposed to put a down payment when buying a house. Not everyone agrees on the 20% down payment rule, but it is advised that you have at least 20% of the total price for the house available to put on a down payment.
To determine how much you need to put for a down payment, we have to look at the requirements for different loans. According to Nerd Wallet, FHA Loans require putting as little as 3.5%. Other loans, like VA loans and USDA loans, require no down payment at all.
So where is this notion that you need to put 20%? This amount was once the standard. But as loans became more flexible, so did the down payment requirements.
It’s safe to say that having the money to buy a house comes first. So if you don’t have enough money to put a down payment, maybe get your finances in check first.
Are You Emotionally Ready For the Task Ahead?
It’s safe to say that not everyone is ready to settle down and buy a house. People have different desires and aspirations. Some people prefer traveling the globe before settling. If you have strong desires to constantly travel and be away for months, then buying a house isn’t the smartest move to make.
Even if you have the money and want to buy a house, are you emotionally ready for the task ahead? Homeownership isn’t simple and, quite the opposite, it’s hard. You have to keep an eye on lots of things and constantly maintain the house. There is a set of additional responsibilities that come with homeownership.
If you’re not emotionally ready for that, then it’s best to delay the decision.
Do You Know the Market
This one is very important. Even though you don’t need to be an expert, you should know that there is a buyer’s and a seller’s market.
A buyer’s market favors the buyers. In a buyer’s market, the supply outweighs the demand. This means that buyers have an advantage over sellers when negotiating prices. Since there are more properties available than there are buyers, the buyer can easily dictate the price since they can go to another seller. This forces the sellers to sell properties much cheaper than normal.
A seller’s market is the opposite. You want to be a seller in a seller’s market. As it is the opposite of a buyer’s market, it means that there are more buyers and fewer sellers. This gives seller’s all the leverage and negotiation power. They can dictate prices since there will always be someone else to step in and negotiate.
When looking to buy a house, you want to do it in a buyer’s market.
Do You Know the Mortgage Rates?
Mortgage rates vary. But you should know that they are important, regardless if they’re high or low. Currently, in the US, the average mortgage rate is 3.99%, This is relatively low compared to previous years. So that makes taking a mortgage loan more favorable.
While the mortgage rates shouldn’t be the deciding factor if you’re going to take out a loan or not, you should know that high mortgage rates can complicate things even further. Considering that most Americans take out a 30-year mortgage, paying high rates each month for the next three decades isn’t the best possible situation you want to find yourself in.