Five Riesgos to Avoid When Buying Your First Home
Buying a home is typically the biggest purchase anyone makes, which makes it the scariest, too. Las Fabulosas dug deep for must-know tips before jumping into the real estate game.
Plan Your Life First
Younger individuals and couples should plan -- when possible -- for life changes that may occur. “For young people, there are too many changes that happen initially to buy immediately,” says Andres Gutierrez, financial expert and host of The Andres Gutierrez Show. Career changes, marital status changes and having children can all affect your financial status.
Know Your Budget
Do not buy a home until you are 100 percent free of debt, including any loans. Once that is checked off, Gutierrez suggests this simple formula: Your mortgage shouldn’t be more than 25 percent of your take-home pay. Pay for the home with as much cash as possible, to avoid the rapidly rising interest rates. Also, try to use a 15-year mortgage, as opposed to 30. “Pay off your house before your newborn goes to college. Then use that payment toward their education,” he says. Remember to account for taxes and home insurance in your monthly budget. “The biggest mistake is buying more home than you can afford,” says Gutierrez.
Find a Trusting Agent
When interviewing real estate agents, ask the tough questions, “Learn their fortés, what they have sold in the past year, and ask to see their résumé,” says Sarah Carmona, agent at Dreams Realty in Nevada, who was listed as a top real estate agent by the National Association of Hispanic Real Estate Professionals. Your realtor should also understand your needs and wants. “Get on their multiple listings service to directly stay on top of the market,” says Carmona.
Prepare an Emergency Fund
Home ownership, versus renting, will always require repair and maintenance -- even with new constructions. “Have three to six months living expenses saved as an emergency fund,” suggests Gutierrez. The emergency fund accounts for small and large repairs, as well as the chance of a reduction in take home pay.
Remember, this is a huge purchase, so take it slowly. While the market is currently booming and houses are selling like pan caliente, it’s still important to play it safe and protect yourself. “Make sure you are preapproved before starting the house-hunting process, to know how much house you can afford,” says Carmona. “You don’t want to fall in love with a house you can’t afford.” Shop rates with several lenders -- not just one. Start with your bank and other bigger establishments, which Carmona says usually have lower closing fees. Once you make an offer, take time to follow necessary steps such as getting an inspection. You want to go in with your eyes wide open on what the actual costs will be.