{"id":11876,"date":"2019-10-24T07:14:58","date_gmt":"2019-10-24T07:14:58","guid":{"rendered":"https:\/\/wp.nootheme.com\/citilights\/?p=11876"},"modified":"2019-10-24T07:27:24","modified_gmt":"2019-10-24T07:27:24","slug":"8-things-you-need-to-do-when-buying-a-home","status":"publish","type":"post","link":"https:\/\/wp.nootheme.com\/citilights\/8-things-you-need-to-do-when-buying-a-home\/","title":{"rendered":"8 Things You Need to Do When Buying A Home"},"content":{"rendered":"\n<p>Everything you need to know about buying a home \u2014 on one index card.<\/p>\n\n\n\n<p>A home is often the biggest financial investment you\u2019ll make in your lifetime. In fact,&nbsp;a recent Zillow analysis&nbsp;reports that the typical American homeowner has 40% of their wealth tied up in their home.<\/p>\n\n\n\n<p>Several years ago, I wrote&nbsp;a complete guide to financial planning&nbsp;on one index card, which&nbsp;went viral&nbsp;and later became a book: \u201cThe Index Card: Why Personal Finance Doesn\u2019t Have to Be Complicated\u201d (co-written with Helaine Olen).<\/p>\n\n\n\n<p>Now, following up on my original index card, I\u2019ve written a guide on buying a house. Below is the housing index card \u2014 a handy resource to print and take with you as you look at houses or think about buying one \u2014 plus some additional advice as you contemplate making the big decision.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">1. Buy for the long run<\/h2>\n\n\n\n<p>A home is a significant investment, not to mention a linchpin of stability. According to the&nbsp;Zillow Group Consumer Housing Trends Report 2017, the majority of Americans who sold their homes last year had lived in their home for at least a decade before selling.<\/p>\n\n\n\n<p>Some are even staying for the long haul. Almost half (46%) of all homeowners are like me \u2014 living in the first home we ever purchased. In short: Buy a home you want to live in for at least five years \u2014 one equipped (or ready to be equipped) with the features and space you need, both now and in the future.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">2. Buy to improve your life, not speculate with money<\/h2>\n\n\n\n<p>Your home is more than a financial investment; it\u2019s where you sleep, eat, host friends, raise your children \u2014 it\u2019s where your life happens.<\/p>\n\n\n\n<p>The housing market is too unpredictable to buy a (primary) home purely because you think it will net a big short-term financial return. You will most likely be living in this home for several years, regardless of how it appreciates, so your first priority should be finding a home that will meet your needs and help you build the life you want.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">3. Focus on what\u2019s important to you<\/h2>\n\n\n\n<p>Today\u2019s housing market is short on inventory, with&nbsp;10% fewer homes&nbsp;on the market in November 2017 than November 2016.<\/p>\n\n\n\n<p>So, focus on finding a home you can afford that meets your needs \u2014 but don\u2019t get distracted by shiny features that might break your budget. Nice-to-have features often drive up the price tag for things you don\u2019t particularly value once the initial enjoyment wears off.<\/p>\n\n\n\n<p>Make a list of your basic needs, both for your desired home and for your desired neighborhood. Stick to finding a home that meets these needs, without buying extra stuff that adds up.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">4. Set a budget and stick to it<\/h2>\n\n\n\n<p>It\u2019s important to set a budget early \u2014 ideally before you even start looking at homes. In today\u2019s market, especially in the more competitive markets, it\u2019s incredibly easy to go over budget \u2014&nbsp;29%&nbsp;of buyers who purchased last year did.<\/p>\n\n\n\n<p>The most common culprit? Location. Zillow\u2019s data indicates that urban buyers are significantly more likely to go over budget (42%) than suburban (25%) or rural (20%) buyers.<\/p>\n\n\n\n<p>There\u2019s nothing inherently wrong with that. Local schools matter, and psychologists tell us that a short commute improves your life. But be realistic about your local market and about yourself. Know what you\u2019re willing to compromise on \u2014 be it less square footage, home repairs or a different neighborhood.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">5. Aim for a 20% down payment<\/h2>\n\n\n\n<p>If you can afford it, a 20% down payment is ideal for three reasons:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Buyers who don\u2019t put a full 20% down pay a premium, most commonly in the form of&nbsp;private mortgage insurance (PMI). This is less financially punishing than it used to be, given today\u2019s low mortgage rates. A monthly mortgage payment (with PMI) may be lower than a monthly rental payment in many markets \u2014 but still.<\/li><li>Buyers who put more down upfront typically make fewer offers and buy faster than those who put less down.&nbsp;Zillow research&nbsp;found that buyers with higher down payments make 1.9 offers on average, compared to 2.4 offers for buyers with lower down payments (after controlling for market conditions).<\/li><li>A higher down payment reduces your financial risk. You don\u2019t want to owe more money than your house is worth if local markets dip when you need to sell.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">6. Keep a six-month strategic reserve<\/h2>\n\n\n\n<p>While a down payment is a significant expense, it\u2019s also important to build up a strategic reserve and keep it separate from your normal bank account.<\/p>\n\n\n\n<p>This reserve should cover six months of living expenses in case you get sick, face an unexpected expense or lose your job. A strategic reserve will not only save you from financial hardship in an emergency but also provide peace of mind.<\/p>\n\n\n\n<p>When we accumulated a strategic reserve, my wife and I finally felt ready to build for our future. Without it, we were living from paycheck to paycheck, anxiously managing our cash flow rather than saving or budgeting.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">7. Get pre-approved, and stick with a fixed-rate mortgage<\/h2>\n\n\n\n<p>The pre-approval process requires organizing all your paperwork; documenting your income, debt and credit; and understanding all the loan options available to you. It\u2019s a bit of a pain, but it saves time later.&nbsp;Getting pre-approved&nbsp;also shows sellers that you\u2019re a reliable buyer with a strong financial footing. Most importantly, it helps you understand what you can afford.<\/p>\n\n\n\n<p>There are a variety of&nbsp;mortgage types, and it\u2019s important to evaluate all of them to see which is best for your family and financial situation. Those boring 30- and 15-year mortgages offer big advantages.<\/p>\n\n\n\n<p>The biggest is locking in your mortgage rate. In short: A 30-year fixed mortgage has a specific fixed rate of interest that doesn\u2019t change for 30 years. A 15-year fixed mortgage does the same.<\/p>\n\n\n\n<p>These typically have lower rates but higher monthly payments, since you must pay it off in half the time. Conventional fixed-rate mortgages help you manage your household budgeting because you know precisely how much you\u2019ll be paying every month for many years. They\u2019re simple to understand, and current rates are low.<\/p>\n\n\n\n<p>One final advantage is that they don\u2019t tempt you with a low initial payment to buy more house than you can afford.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">8. Comparison shop to get the best mortgage<\/h2>\n\n\n\n<p>Though a home is the biggest purchase many of us will ever make, most home buyers don\u2019t&nbsp;shop around for a mortgage&nbsp;(52%&nbsp;consider only a single lender).<\/p>\n\n\n\n<p>I certainly didn\u2019t. This did save me some annoying calls and hassle, but it cost me $40 or $50 every month, for years. The difference of half a percentage point in your mortgage rate can add up to thousands of dollars over the lifetime of the loan. It\u2019s important to evaluate all the available options to make sure you\u2019re going with the lender who meets your needs \u2014 not just the first one you contact.<\/p>\n\n\n\n<p>The three most important factors are that the lender offers a loan program that caters to their specific needs (76%), has the most competitive rates (74%) and has a history of closing on time (63%).<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Everything you need to know about buying a home \u2014 on one index card. A home is often the biggest financial investment you\u2019ll make in your lifetime. In fact,a recent Zillow analysisreports that the typical American homeowner has 40% of their wealth tied up in their home. Several years ago, I wrotea complete guide to financial planningon one index card,&#8230;<\/p>\n<div><a href=\"https:\/\/wp.nootheme.com\/citilights\/8-things-you-need-to-do-when-buying-a-home\/\" class=\"read-more\">Read More <i class=\"fa fa-arrow-circle-o-right\"><\/i><\/a><\/div>\n","protected":false},"author":1,"featured_media":6429,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[85],"class_list":["post-11876","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","tag-family-living","has-featured"],"_links":{"self":[{"href":"https:\/\/wp.nootheme.com\/citilights\/wp-json\/wp\/v2\/posts\/11876","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/wp.nootheme.com\/citilights\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/wp.nootheme.com\/citilights\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/wp.nootheme.com\/citilights\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/wp.nootheme.com\/citilights\/wp-json\/wp\/v2\/comments?post=11876"}],"version-history":[{"count":0,"href":"https:\/\/wp.nootheme.com\/citilights\/wp-json\/wp\/v2\/posts\/11876\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/wp.nootheme.com\/citilights\/wp-json\/wp\/v2\/media\/6429"}],"wp:attachment":[{"href":"https:\/\/wp.nootheme.com\/citilights\/wp-json\/wp\/v2\/media?parent=11876"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/wp.nootheme.com\/citilights\/wp-json\/wp\/v2\/categories?post=11876"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/wp.nootheme.com\/citilights\/wp-json\/wp\/v2\/tags?post=11876"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}