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5. The Down Payment

In addition to understanding what type of loan to look for, potential home buyers also need to give lots of thought to the down payment. In a traditional mortgage, you would provide a down payment of twenty percent or more of the price of the home. Twenty percent is the magic number because for most lenders, this is the amount of equity they require so that you can avoid paying PMI, or Private Mortgage Insurance.

When you are unable to put twenty percent down, the lender generally requires that you also pay the PMI premium, which can be anywhere from twenty dollars to a few hundred dollars each month. When shopping for a mortgage, take this into consideration and ask if there are alternatives to paying PMI if you will be unable to come up with the full down payment.

Anyone who has ever bought their own home will understand how stressful it can be. There are so many things to think about and if each situation is not given enough thought or attention you could end up making big mistakes. That being said, it can also be very exciting to go house hunting and to think about what kind of life you will have in your new home.

One of the most important things to consider before buying a home is whether you can truly afford the home. It’s not as simple as finding out you’re pre-qualified for a mortgage equal to the value of the home, rather it is a question of whether you are comfortable paying a certain amount of dollars every single month for the length of your mortgage (or until you sell it). Many first time home buyers don’t consider the overwhelming responsibility involved in having a mortgage, and get a price shock when a huge chunk of their monthly income is instantly vanishes before they even get to consider spending it on something else.

6. Location

Location is one of the top things a potential home owner will have to consider. Among the questions you may need to ask yourself are: How far is it from where I work? Can I handle the time/money involved in the commute? If you have children or have plans to start a family, you may need think about how far the house is from a park, from a good school or from your parents’ house.

The location of a home is an essential consideration when it comes to the quality of life you will have while living in the home, as well as the resale potential if you ever do decide to sell in the future. When evaluating a location, pay special attention to the other structures around you and any plans that might be in the works for future structures. It is often said that the 3 most important things to think about when buying are home are location, location, location. You can live with almost any imperfection in a home if you love the neighborhood and your neighbors. You can change almost everything else. But, once bought, you cannot change your home's location.

When you go house hunting, consider any potential home's proximity to your work, the charm of the neighborhood, how the home is situated on the lot, ease of access, noise from neighbors, traffic, or pets, and access to parks, shopping, schools, and public transportation. Situation factors are also to be considered when home-hunting. If the home is on a hill does it have a view, a walkout basement, or lots of stairs to climb? Do neighbors' windows look directly into the home? Is the yard suitable for kids, pets, gardening, or other uses? Is access to the property safe regarding driveway elevation, stairs up to (or down to) the front door?

All potential buyers should be sure to thoroughly check out the neighborhood, and not just the actual house. Drive around on week days and weekends, during the day and in the evening. Are homes in the neighborhood consistent in size and features? Do the neighbors keep the yards clean and tidy or are there old cars and trash around? Is the neighborhood safe enough for people to walk, run, or bike and are there children playing in the yards? Buyers should also consider the home’s curb appeal. Your home should reflect your lifestyle. Do you live a laid-back life? Then you might not want a formal Victorian or Tudor style home. Something simpler and more contemporary might be in order. Look at the exterior features. A brick home is easier to maintain, unless you live in an earthquake-prone area! Is the roof in good condition? Is the landscaping attractive and are the sidewalks leading to the home safe?

7. Physical Condition

Most home buyers are not in the construction industry, are not professional home inspectors, and simply do not have a handy-man background. Many homes in horrible physical condition are often easily resold to unsuspecting first time home buyers who most times do not consider the overwhelming costs of home repairs that will be needed in a few years or less on their newly purchased home. Don’t ignore the fact that the house you love has a roof whose lifespan is about to run up, or a has bad electrical or plumbing. Always assume the worst when it comes to home repairs, and take that into consideration before you buy one home over another.

Another important thing to consider is whether the house has the potential to be upgraded in order to add value. It might be a case of renovating the bathroom, building a sun room or perhaps finishing the basement. The amount of money you spend on these projects should, ideally, increase the value of your home which is very useful when you plan to sell or get refinancing. The amount of space you need will be one of the most important factors to consider when looking at a specific property. You want to make sure the house is large enough to accommodate you now and in the near future. If it's not, you need to determine whether or not it would be financially prudent or even possible to remodel.

There are people and contractors who will buy a house, fix it up very quickly and turn around and sell it for profit. The problem with these houses is that they tend to look very good on the surface with very nice paint, trim, granite counters etc, but on the inside they are very ugly and might have substandard electrical, insulation and so on. If you are interested in one of these houses then make sure they have closed permits and check with the inspector to see if their inspection notes. Or better yet, just don’t buy it.

Most people may end up buying a house that has mortgage payments so large that the buyers have to “make the payments fit” into their budget. While this is not the best way to buy a house, some of these buyers then make things worse by spending more money on renovations and house decorations. Unless you buy a total wreck you do not need to spend a lot of money on renovations. You can live with the non-granite kitchen counter and the appliances that don’t fit the room perfectly. If you will be buying a fixer-upper, it is a good idea to determine what the maintenance issues are and exactly how much it will cost to address these issues. In some cases, the required repairs may end up being more extensive than you ever thought possible. This is definitely something you will want to find out before buying rather than afterwards. Certain areas are more prone to natural disasters than others.

If you are buying a home that is in a flood plain or on a fault line, you will have to deal with the increased risk that comes with living in an area that has a good chance of being destroyed in a worst-case scenario. This may mean buying special insurance or installing structural braces. You may be thinking about buying your dream home. But is your dream home wise? Do you really need 4 bedrooms and 4 baths when you live alone? A large home can give you the extra space you've always wanted for a home office or crafts or art projects. But you will be faced with higher heating bills and higher taxes. It will take more furniture to furnish and money to decorate. Think about how the new home space will be used and whether it will fit your lifestyle now and in the future.

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