Buying a house is a big step – much bigger than many people realize. For first-time buyers, it often comes with a host of expenses and responsibilities that they never dreamed of, in addition to being the largest financial transaction of their entire lives up to that point. It has been said that buying a house is a lot like getting married because you will be stuck with your purchase (and the things you don’t like about it, which you discovered after the fact) for the next 15 to 30 years. So it’s critical that you do everything you can to ensure a wise purchase. A good starting place would be these 5 questions to ask yourself before buying a house in Lufkin.
1. What Are My Real Reasons for Buying a House?
This question could possibly be the most important to ensure you don regret your purchase later. Just as with marriage, understanding why you really want to buy a house in Lufkin and having realistic expectations are key for long-term satisfaction.
According to an April 2019 report, here’s what can happen when you don’t get clear on your reasons for and expectations about buying: “51 percent of millennials have regrets about purchasing their homes. Among their biggest regrets are that their monthly mortgage payments are too high, the house requires too much maintenance, and the house has depreciated too much in value since purchase.” And yet another survey found that “63 percent of the millennial homeowners surveyed had buyer’s remorse. In this case, the top regret . . . was unexpected maintenance costs or hidden costs.”
Most real estate experts, then, advise doing your research to make sure your reasons for buying a house really are good reasons backed up by evidence. If, for example, you think buying will be cheaper than renting, you may be in for a surprise.
2. Can I Truly Afford It?
Since the recession, lending standards have tightened up quite a bit. So you’ll likely need a larger down payment than you would have a few years ago. And then there are all those maintenance costs and “hidden” expenses we just mentioned – the ones that cause so many millennials to regret buying a house.
Your target on the down payment should be as close to 20% of the purchase price as possible. If you can in fact come up with that down payment, you’ll be “more appealing to lenders, and you’ll save money because you don’t have to pay for Private Mortgage Insurance (PMI).”
Then, after deciding how much down payment you can afford, you’ll need to determine a comfortable monthly mortgage payment range before buying a house in Lufkin. Buyers often run into trouble when they borrow the full amount they’ve been approved for and then have trouble making the mortgage payment each month. You can use one of the many online mortgage calculators to determine how much home you can truly afford.
But the mortgage payment is only the beginning of your expenses as a homeowner. You’ll also have to factor into affordability costs for repairs and maintenance, homeowners insurance, property taxes, and HOA fees. And this means you will need some reserve funds to cover these expenses.
3. What Kind of Mortgage Loan is Best for Me?
The next question you need to ask yourself before buying a house in Lufkin involves the financing. The first consideration is the length of the loan, most commonly either 15 or 30 years. The longer the term, the less you’ll pay each month, but you’ll wind up paying a lot more in interest over the life of the loan.
The next consideration is between a fixed rate mortgage and an adjustable rate mortgage. A fixed rate mortgage, as the name suggests, has an interest rate that stays the same over the life of the loan, which typically allows for better planning and budgeting. An adjustable rate mortgage starts off with a low interest rate and then later increases at set intervals.
Experts in real estate financing suggest that first-time buyers should be wary of adjustable rate mortgages. “Your interest rate will go up and increase your payments, and then you may find it difficult to keep up. Your equity may not grow quickly enough to allow you to refinance before your rate changes kick in.”
4. Do I Really Need an Inspection?
If you don’t want any costly surprises down the road, make sure the house passes all inspections. If you don’t have an inspection, you may find out after buying a house in Lufkin that you have to pay for some enormously costly repairs out of your own pocket. The relatively small cost of an inspection will be worth every penny – even if you plan to do major renovations because you’ll then know what lies ahead.
Another precautionary measure you can take is to have an inspection contingency in the purchase contract. This contingency will allow you to negotiate repairs or even cancel the sale if the house doesn’t pass the inspection. Your agent can help you craft water water-tight inspection contingencies to ensure you’re fully protected. (To find out more about this, call 936-676-3516.)
5. Why Do I Need a Real Estate Agent?
Before buying a house in Lufkin – before taking the first step toward that goal, really – you should hire a qualified local agent. An agent can make all the difference in making the process of finding and buying a house go smoothly. Your agent will learn what you want and need and then use her knowledge of the local market to help you find exactly that.