There are a lot of things one has to consider when purchasing a home. This is especially so for parents with young children. The idea of moving your family to a luxurious neighborhood is always enticing, but it could cause significant strain if the move is not well planned.
Buying a house is a long and often tedious process, but with the right information, it can be exciting. Read on to find out everything you need to know as a parent when you are buying a house.
1. Do Not Rush Into Buying
An investment in a house is one that carries a lot of benefits but also comes with risks. If you plan the process thoroughly and purchase when you are prepared, you reduce the risks significantly.
Therefore, when you get the idea of buying a house for your young family, take some time to consult with your partner and come up with a plan. Assess your finances and determine how much you can afford — factor in future costs such as education for your kids.
Once you determine how much you can afford and have a clear vision of the house you want, you can start preparing your finances.
2. How To Get Your Finances In Order
Your financial position and credit history play a significant role in the mortgage loan you can receive and the interest you will be charged. Therefore, before you even begin searching for mortgage brokers or shopping for houses, you should take some time to get your finances in order.
Start by checking your credit score. If there any errors in the report, have them corrected. Even if your credit score seems good, it could always be better. To improve your credit score, you should:
- Pay all your bills and present loans on time
- Reduce the debts you have
- Do not close old accounts
As you work to improve your credit score, develop a savings plan to help you raise the down payment for your house. Though there are options that can allow you to purchase a home with little to no deposit, it’s advisable to put down a down payment.
Aim to raise 20-30% of the total amount you will require for the house. Give yourself a year or two, depending on how much you can save to raise the down payment. Some of the biggest mistakes new homebuyers make usually revolve around finances.
Ensure that you plan well and take your time. If you rush in unprepared for the future, your dream house might become a nightmare.
3. Visit Mortgage Lenders
Once you have saved enough for the down payment and your credit score is exemplary, you can start shopping for a mortgage loan. Visit several mortgage lenders and compare their interest rates and fees. Doing so can help you save up to $3,500 over the first five years.
Once you find a lender with suitable terms, ask for a pre-approval. This will let you know if you will qualify for a loan amount that will enable you to proceed with your plans. If it’s lower than what you expect, consult the mortgage lender to find out what you can do or consider adjusting your plans.
Depending on your financial position and credit score, you may even be offered more than what you expected. If this happens, ignore the temptation to revise your budget upwards and stick to the plan you have.
4. Be Specific with What You Want
Once you have been pre-approved, searching for a house will be easier. You can focus all your attention on houses that are within your price range. However, before you begin, determine the type of home and neighborhood you want. Factors to consider include:
- Number of bedrooms and placement
- Open floor plans and sightlines to the backyard
- Amenities near the house
- How busy the sidewalks are
Most of these factors are important if your children are young. Consider hiring a realtor to help you with your search. Through their networks and knowledge of the neighborhood, it will be easier for them to find you your dream house.
5. Get The House Inspected
It is important to note that an inspection is different from an appraisal. The purpose of an inspection is to check for any damages within the property that may require repair. Your mortgage lender will also require an inspection report before they release the funds.
If the house needs repairs, you can negotiate with the seller to have the costs deducted from the selling price. Alternatively, you can request them to have the repairs done before you buy the house.
How To Make Your Investment In A House Worthwhile
Mortgage plans can last up to thirty years. As such, a portion of your income will be deducted for that period. Therefore, you must account for all your future financial needs before you buy a house. This is the only way to ensure you will be able to repay your loans and meet your family’s needs without straining.