Is buying a house on your list of things to do in 2016? Some people love the carefree lifestyle of renting and some others really want to buy a house. I am personally at somewhere in between right now. I love living in the city and I love our new apartment, however after all the drama with our landlord BF and I are really considering buying a home.
As a Financial Planner I have helped countless people buy a home and to be honest I never thought I would be one of them. I’m not sure if I’m ready to leave my convenient life in the city just yet, but my need to buy a house is definitely in the back of my mind.
If you’re thinking of buying a home next year here are some things you need to have:
Savings
This goes without saying, but you need savings because buying a home is expensive. Ideally you should have 20% of the purchase price of your new home saved in cash for the down payment. However with that being said some banks approve mortgage loans with as little as a 5% down payment. Keep in mind that the larger the down payment, the lower the mortgage loan amount and therefore the lower your monthly payments will be and the less interest you’ll be charged.
A real estate agent
Buying a home is a big decision and having the help of a professional can make your big purchase a little bit less overwhelming. A real estate agent can help you negotiate the price of your home with the seller, look for specific things during the home inspection as well as offer tips for moving and getting set up. In short a real estate agent is an experienced professional who can make your home buying and moving a little bit easier.
A notary
Your notary is the person who makes the home buying process official. They are basically your seal of approval in all the paperwork and logistics of the purchase. Finding a good notary you can trust can help you walk through the process step by step. As a bonus you can use the notary again for other financial transactions down the road such as selling your home and drafting your Will.
Extra cash
Saving money for the down payment is only one part of the financial aspect when you buy a home. You will also need some extra cash for moving expenses, property taxes, furniture and getting set up or transferring your utilities such as cable and hydro. The last thing you want is to buy your house, move in and be cash poor. So talk to a personal banker and set realistic goals.
A personal banker
Of course with a major purchase like a house you need the guidance of a professional. Having a relationship with a personal banker can help negotiate your mortgage loan rate, set a realistic monthly budget after you move in and ease the overall financial stress that comes with buying a house.
I think you also need to have ‘the house’ because that leads into some other considerations that can’t be ignored. Specifically, what are your plans for the house that will impact your finances for the next few years. You can have two houses priced exactly the same, but if one has everything exactly as you need it with no big changes needed where the other one would see you wanting a new kitchen and a replacement roof in the next few years, that actually should change your up front approach quite drastically. Just something to consider.
@Money Beagle – that’s so true! When BF and I were looking for a home we looked at some older houses and remodels, but decided we wanted to buy a new construction. However the problem with that is they tend to be more pricey. So we’re still renting and saving our moolah.
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