We’ve assembled a Boston area home buying checklist for people thinking of entering the real estate market, looking to buy a house. Let’s take a look at these seven important tips.
1 – Home buying should be for the long haul.
Not too long ago, buying houses and turning around and selling them (or “flipping” them) was a popular way to make money. Today, we recommend considering planning to live in the home you buy for at least 7-10 years. Of course, there’s no hard and fast rule. People move where their jobs take them – whether it’s across town or across the country – but give consideration to whether you’ll likely move within the next few years before you decide to buy. For some people, it may be better to rent for a few years.
2 – Do some soul-searching before you decide to buy.
Your Boston area home buying checklist should include asking yourself a series of tough questions to make sure your heart is in what you’re about to undertake. Buying a home is the single largest purchase most people will make in their lifetime – make sure you recognize that, and treat it importantly.
3 – Ask yourself these questions:
Will you choose to start a family soon?
Do your needs require a home with a large yard for a growing family or your pet(s)?
How do you feel about yard work?
Do you like the city better than the suburbs?
4 – Take your time before you buy.
Most people tend to jump right into to the home buying pool without testing the water first. Take your time. There’s no hurry. While interest rates are fairly low, the temptation may be to act quickly, but experts say the rates are expected to remain fairly affordable throughout 2017. Use the extra time you allot to make sure your credit score is in the best shape possible and that the other items you’ll need for loan qualification are in order (tax returns if you’re self-employed, source and verification of your down payment, etc.)
5 – Buy within your budget.
One of the most important items on your Boston area home buying checklist should be to focus on what you can comfortably afford. Remember, mortgage lenders will use your debt-to-income ratio (DTI) to determine whether you qualify for home loan financing. Before you start the home shopping journey, take a look at your DTI. Take the total of all your recurring debt including your proposed monthly mortgage payment (PITI) along with other monthly debt like credit cards and car payments. Divide that total by your gross monthly income. Most mortgage lending experts say your DTI should be 36% or lower. The most important thing to remember is this: Take out the loan and the monthly payment you can comfortably afford, not necessarily the one you qualify for. Making a higher monthly mortgage payment is no fun if you can’t afford to buy steaks for the new backyard grill occasionally. Some experts recommend buying a home you can afford based on one income. That way, should you or your spouse lose their job or get laid off – or elects to become a full-time parent – you can still comfortably pay for your home.
6 – Consider the tax advantages.
The tax benefits are a big part of any Boston area home buying checklist. Currently, the mortgage interest you pay on a primary residence is tax deductible. So, the tax savings are of huge consequence since you can deduct your home loan interest and your real estate taxes from your gross income. For example, if you earned $75,000 in gross income in 2016 and you paid $10,000 in mortgage interest and your property taxes were $2,000, you could lower your taxable income to $63,000 – saving you a bundle on income tax.
7 – Create a moving account.
Another important item on your Boston area home buying checklist is to start a move-in fund. Of course, you’ll have to have a down payment, but don’t forget other things like closing costs, moving expenses and other necessities for your new home. If you’ve been renting, for example, you may need to purchase a lawnmower and other lawn care equipment – along with that backyard grill!
8 – You may choose to rent, if you’re not ready to buy.
Let’s face it… sometimes it’s not a good idea to buy. Maybe after you review your Boston area home buying checklist you’ll realize it’s not the right time. If you’re not ready, don’t force it. Rent instead. You’ll be happier, healthier and financially wiser to put it off a year or two until you feel more comfortable. Save your money. Find a better job. Get your finances in order. Do your homework. Then when you’re ready to buy you’ll be that much more prepared.
Read more about home buying advice in the section of articles on Boston Home Buying Tips just below our Boston Real Estate Categories in the column to your right.