Anyone in the process of looking for their first home knows how stressful it can be. In addition to talking openly about your personal financial situation with your lender, you might also be worried about potential neighborhoods, commutes, and costs. However, you might be able to fend off stress by doing a little extra legwork ahead of time. Here are two things you should do before signing paperwork on that new home, so that you can avoid a serious case of buyer's remorse:
1: Try the Travel
Sure, you might have a good idea of what neighborhood you want to live in, but what is that travel time really like? To get a better idea, take the time to actually try the travel. Here are a few trips you should take before you finalize that home purchase:
- Schools: Drive from your house to your children's prospective schools during normal drop off and pick up times. In addition to charting the travel time, you might also be able to tell how school zones affect the local traffic.
- Work Commute: Don't rely on Internet mapping services to estimate your daily commute to the office. Instead, drive to work from that house in real time. Sometimes mapping services are incorrect or rely on costly tolls, which can affect the length and expense of your daily commute.
- Shops and Restaurants: Don't forget to chart the distance between your potential home and grocery stores, restaurants, and shops. If you plan on switching stores, shop there before you make your decision. That nearby corner store might not matter much if you don't like the produce section.
Keep in mind that inconvenient travel times will affect you on a daily basis. If you hate that commute or you don't have time to drive your kids to school like you normally do, you might regret your home purchase. It might seem painful to walk away from a deal on a home that you love, but finding a house close to the places you travel to every day might be worth the hassle.
2: Live On A Hypothetical Budget
Typical mortgage loans take between 4 and 6 weeks to finalize and close, but depending on the details of your escrow, you might find yourself waiting even longer. Although this wait might seem annoying, it is actually a great opportunity to test out the financial waters of home ownership. After you know which house you want to buy, estimate the mortgage and start living on a hypothetical budget. Don't forget to factor in these expenses:
- Private Mortgage Insurance: Unless you saved 20% of that home loan for a down payment, you might find yourself paying private mortgage insurance. These insurance policies protect your lender against non-paying homeowners, and the costs vary between 0.5% and 1% of the loan—split into monthly payments. For example, if your home loan is $200,000, your PMI payment could be between $83 and $167 each month—on top of your mortgage payment.
- Homeowner's Association Fees: If that home is governed by an HOA, find out what the monthly fees are and what they cover.
- Utilities: Don't forget to add in estimated utility payments such as gas, electrical, and water bills. If you need help figuring out what these payments would cost, contact the providers and ask for a range. Some companies can tell you the yearly high and low payment, so that you can calculate your budget.
As you live on your hypothetical budget, take all of the money you would be paying on your mortgage, PMI insurance, HOA, and utilities and put it in savings. That way, you can bolster your down payment, or have a little extra cash for furniture—if you buy that house. However, if you find that new budget restrictive, you can always back out of the deal and find something within your budget.
By taking the time to research travel times and budget constraints, you might be able to decide whether or not that new house is the home of your dreams. For more tips, work with an experienced real estate company. Visit sites like http://sgcityrealestate.com/ to learn more about real estate services in your area.