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Once upon a time, owning a home was considered to be one of the safest investments someone could make. These days with thousands of people underwater with the mortgages, and many others have walked away, owning a home has become a lot scarier, and out of reach for many. While it may be scary to purchase your first home (especially after all the bad press about the recent real estate bubble), it’s still one of the best investments anyone can make for your future. Owning a home doesn’t have to be scary. The easiest way to minimize that risk is by following these crucial steps.
Avoid Subprime, “Special” or “Adjustable” mortgage rates and find a fixed rate mortgage
One of the biggest problems people faced when they were having trouble with their homes was that they took out an adjustable rate mortgage. The appeal of an initially low interest rate got a lot of people into homes. Unfortunately, many were not prepared when the interest rate increased and the monthly mortgage went up, squeezing the homeowner out of their home.
While adjustable rate mortgages are appealing because of their promises of a low interest rate, a fixed rate mortgage allows the homeowner to plan much further in advance. This predictability for your finances is invaluable for many, and the peace of mind is worth much more than what you might otherwise initially save by using a special or adjustable rate mortgage.
Put a Home Warranty in Place
One of the most common things potential homeowners talk about as a deterrent to buying a home is the fact that when they buy it, that’s it, they’re the ones responsible for whatever may go wrong. That’s why to help alleviate that risk, when buying your home, you should put a home warranty in place. A home warranty will help cover any major costs associated with the general upkeep and maintenance of your new home. This is mostly limited to things like fixing a leaky roof, a broken hot water heater, or wiring that may have gone wrong at some point.
Your home warranty will begin once you close on your home kicks in. Depending on the coverage you selected, this warranty will help cover your home against whatever may break, wear out or need replacing. Some companies even offer you coverage for major home appliances like your dishwasher or specialty fixtures that may come with the home. In Atlanta, the seller is usually willing to pay for it for the first year.
Inspect & Price Potential Repairs
Your dream home may be in the perfect neighborhood, close to the best schools and right next to work, but you don’t want to move into a place that all sorts of problems that you’d be responsible for after purchasing. Generally, pest and roof inspectors will provide you with an estimate if they encounter any problems. A more general inspection report of the home could reveal many problems that will need to be repaired before you move in. Work with your agent, you should be able to schedule actual repair contractors to come and evaluate the home before you buy and help put together a few bids to give you a better idea of how much work will be needed after your purchase. Going into buying the home with all the knowledge you can get is the best way to negotiate more favorable terms.
Buy with the Next Ten Years in Mind
Purchasing a home comes with certain expectations. Many people who got in trouble over the last few years were trying to play the market and “flip” those properties quickly for a profit. When buying a home now, you should buy with the expectation that you will be living there for at least the next five to ten years. This can give you a better peace of mind knowing that you will have a place that you can come home to while supporting your investment for a long time to come. Things happen in life obviously, so you can’t predict everything that will happen in the next ten years (new job, larger family, etc), but when buying the home, look for one that you can imagine seeing yourself in for the next ten years.
There are no guarantees when you are buying a home. That’s why the more you prepare and think long term, the better off you will be.