The Hunt is On
House hunting season is in full swing and the home-buying market is hot this year! Mortgage rates remain historically low and in most metropolitan areas it is a sellers’ market. If you’re thinking about buying that first home or upgrading to a better one, make sure you’re prepared with financing before you go to your first Open House. Here are a few hot tips you should know before making an offer.
- Set your ceiling. You may find yourself in a bidding war in this competitive market, so know your limit on price ahead of time and stick to it. Once you find that dream home, it will be tougher to stick to your guns and you risk buying more house than you can reasonably afford.
- Make an inspection connection. Once your offer is accepted, you’ll need to schedule an inspection as soon as possible. Find a reputable inspector who charges a reasonable rate beforehand so you’re not scrambling at the last minute.
- Organize your mortgage application You’ll also need to apply for your mortgage right away, even if you were pre-approved. Prepare for an inquiry into the last 60 days of all of your financial transactions. If you made any large deposits, you’ll have to prove the source by showing copies of cancelled checks along with valid explanations. You also need your last two years’ tax returns and, if you’re self-employed, a Profit & Loss statement for the year-to-date.
- Do your research regarding prices, taxes and timing The monthly payment you can afford will tell you how big of a loan you can take out. If you want to make a purchase that is more than that, you’ll need to save the balance for a down payment.
- Establish a savings plan Select the date by which you want to reach your minimum goal for your nest egg. Then, calculate how much you need to save each month to get there. Adjust the amount or date according to whether the amount is realistic with your current budget.
- Set up automatic savings transfers Don’t wait to see if there is money “left over” each month, treat savings as another bill to make sure it happens.
Throughout the years…
- Maintain your investment Regular maintenance and check-ups are important for extending the life and value of both your car and home. This will also help you avoid costly repairs further down the road.
- Once you have made your purchase, or paid off your loan, keep saving that amount. You’ll need it for maintenance and other incremental costs that come with ownership.
- Save Six months of living expenses It’s important to have emergency funds to cover your monthly bills in case an unexpected change to your financial situation should occur, like a job loss, extended illness or natural disaster.