Have your recently added “real estate” to your shopping list? If it were only so easy. Buying a new home is exciting and terrifying and tricky and nerve-wracking, all at once. You must find a piece of real estate that you love; you’re going to be living there for too long to regret your choice.
On the other hand, while price shouldn’t be the only thing you look for in a home, you also need to make sure that your real estate investment is in the right price range. If you spend more than you should on the luxury homes of your dreams, it won’t be as easy to enjoy it as you stress about covering the mortgage every month. Not to mention, real estate is only a good investment if you can sell it for more than you paid for it down the road. If you spend more on your new house than the market value can ever reach for it, you’ll struggle to make your money back when you decide to sell it.
In other words, don’t skrimp on a home that your heart isn’t in, but also don’t spend more than you should on it. Confused yet? To help you out, we’ve put together a list of tips to keep in mind while looking at homes for sale.
- Keep the long game in mind.
Most people think that the value of their home will grow by at least 7% per year; if they paid $100,000 for it today, in two years, they’d be able to make a cool profit of $14,000 off of it. In reality, homes typically appreciate at a rate of 2% to 5%. On top of that, the real estate market doesn’t always increase in value. If your real estate investment is only a “Get Rich Quick” strategy, you’ll find many other investment opportunities that require less risk and generate greater appreciation, faster.
However, when you purchase your home with the anticipation of spending several years there, it can be a good investment. Consider the fact that if you weren’t paying for a mortgage, you’d have to pay rent, which is money that you’ll never see again. If you stay in your home until the market is on a considerable upswing, you might be able to generate a good profit on it. The trick is making sure you’re in it for the long haul.
- Let math keep your feet planted on earth.
When you are shopping for a home, it is easy to get caught up in the excitement and fall in love with a home that is outside of your price range. You won’t love your home as much if you can’t furnish in a way that you love because so much of your resources is being funneled to the monthly payment on it. You won’t love your home as much if you have to work long days and come home to ramen noodles because your money is all going to the mortgage.
Before letting your heart get the best of you while home shopping, take a realistic look at the numbers. What is the monthly payment going to be? Do not forget additional expenses you’ll be subject to, like homeowner’s insurance, taxes, and HOA fees. Many financial experts recommend keeping your mortgage around 25% of your monthly income, for the greatest financial stability. Once you have that number, look for homes within that price range.
- Look for an area you love as much as the home you live in.
They say the three most important factors in real estate are location, location, location. The flooring in your home is only a small aspect of the enjoyment you’ll get out of it, you can change incidental features in the home, but you cannot change the area you’re in if you don’t like it. Consider facts like the commute you’ll have to make to work every day. Think about the schools you’ll be zoned for (this matters even if you don’t have kids; it will be a big feature when you’re ready to sell your home). Walk around your potential neighborhood and make sure the ambiance of it jives with you!
Do you have any other tips for finding a home? Please share in the comments!