Home Buyers

3 Things to Consider When Buying a House

April 19, 2022

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3 Things to Consider When Buying a House

Buying a new house is love. You search the web, shortlist some, go out with your realtor, physically inspect the property, draw plans to design the rooms and the lawn, and start financing.

The whole process is very enticing, both emotionally and financially. And both must be tackled wisely and with care. You do not want to live in a house with no friendly neighbours or pay a million-dollar for a low-priced house just because you love it.

When buying a house, consider these 3 key factors to make the entire process fun and easy.

Are You Ready to Own a House?

Buying a house is a big commitment. There is a consultation cost, legal fee, down payment, arrangement for a mortgage over the year, and so on. All will be your burden to pay, and you must manage to arrange the payment with no delays to avoid any difficulty.

Calculating from a distance, you may think that when you could pay the rent for a house, you would be able to settle the amounts attached to owning a house. If this is the case, I am too happy for you. But if it turns out to be different from your expectations, you could get in serious trouble.

So you are ready to buy a house and consider, let's say, buying a bungalow. It is a wise decision. For one, bungalows are spacious and best when people are moving in open areas and houses.

Other than offering a big space, bungalows offer more features.

What to Buy and Where to Buy?

Once you know that you can manage to pay all that is attached to buying a house, it is time to decide; what to buy and where to buy?

Let us assume that you plan to buy a condo. They are high in demand in the country. The interest rates are relatively low, they are cheaper than a detached house, and they are abundant in the market.

There are some drawbacks to buying a condo - there is a maintenance fee, a condo fee, recreational charges, etc. While if you buy a bungalow, you will not have to pay parking, maintenance, and recreational charges. You own the house and the land it stands. Though, you would be paying the property tax as it is required by law.

Then comes the location options. It is the stage where you need to be very precise in choosing the location of the house. To give you a head start, if I am choosing the area for my new house, I would prefer a friendly neighbourhood, and near to the marketplace, you can set your preferences.

You also need to consider the land on which the house stands and inspect it from proper authorities.

Here you can contact a local realtor to help you find the best house for you.

Manage Your Finance

While you already know that you can afford to buy a house and assume a bungalow is the best option, the lenders also need to be assured if they should lend you the sum or not.

For this, they will be asking some information; your income, mortgage amount, and the down payment of the house.

Checking Your Income

The lenders will be highly interested in what your earnings are. They will check if you have a reliable source of income. It will give them an idea if you could bear the expenses related to mortgages.

They will also consider your current debt level, including vehicle loans, credit card payments, property taxes, and more.

The general rule of thumb is that your gross taxable household income must be five times more than the expenses related to the mortgaging of the house you want to buy.

Checking Credit History

After your income score comes the credit score. For this, mortgage lenders will review your credit history that depicts how you have managed your expenses.

Those having a poor credit history might not get approval for a house mortgage. If your credit history needs an improvement, consider the points given below before even going to mortgage lenders:

  • Closely monitor your credit report continuously
  • Pay the bills on time
  • Do not cross the max limit offered by your credit card company. It is better to keep a balance between 0-50% of the total limit.
  • Establish multiple forms of credit to avoid relying on one source
  • Do not let others check your credit score unnecessarily. It reduces the score.

Remember, not all mortgage lenders look at the sources in the same way. If one finds your reports good enough to lend you the loan for the house, the other might not. Just follow the above guidelines to keep a good track record.

How Do You Pay the Down Payment?

The lenders are also interested in knowing how you would pay the down payment of the bungalow. The best way to score a house mortgage is to self-finance the down payment. However, there are several other ways, as well.

You could apply for a personal loan besides the mortgage to finance the down payment. It usually requires you to have a good credit history with low current debts.

The down payment could also be paid by a family member in the form of a gift, but it has to be properly documented.

The minimum down payment required to win a mortgage depends on several factors, including:

  • The purpose of buying a house - would you occupy it or rent it out?
  • Your credit history
  • The source(s) of your income with proper documentation
  • Estimated closing costs for the transaction - estimated costs involved in buying a house

Time to Buy the New Bungalow

I hope you have everything which requires you to buy a house, and your application to receive a house mortgage gets approved swiftly. It is time for you to consult a local realtor so that they could find you the best bungalow you are searching for.