August 6th, 2015
You've weighed the pros and cons. You've considered the why, the when and the where. And you've done it: you've decided to buy a home.
While buying a home is an exciting decision, it can often be followed by uncertainty and confusion. Don't worry - this can be avoided with the proper preparation.
Here are three tips to consider when embarking on the journey of buying the four walls you'll come to refer to as home:
1. Get preapproved
One way you can make your home-buying experience less stressful is by getting preapproved for a mortgage. This will not only give you an idea of how much you're capable of spending, but it will also give real estate agents a reason to take your mortgage application seriously. Plus, with more than 90 percent of buyers with mortgages lacking a preapproval letter, it will set you apart from your competition.
"In this competitive market, any serious buyer should pursue a preapproval from a lender in advance to beginning a home search," Michael Highfield, associate professor of finance and head of Mississippi State University's department of finance and economics, told Bankrate.com.
"A preapproval letter will set you apart from your competition."
2. Stick to your budget
Once you've gone through the preapproval process, you'll have a realistic idea of what you are able to afford on your home and loan payments. With this information in mind, make sure to stick to your budget. Look for a home you love, but according to Michele Lerner and Realtor.com, compromises might be in order. To make sure that you decide on both a home you love and a home you can afford, determine what your priorities are and what you can live without. Don't get in over your head by rationalizing a purchase outside your price range or dipping into your emergency fund. In the end, finding a comfortable and affordable house will be worth passing up on your over-the-top dream home or depleting your just-in-case money.
3. Protect your home with insurance
Finally, give yourself some peace of mind by purchasing home insurance. It's impossible to predict what could happen in the distant or even immediate future. Insuring your home is the best way to be prepared for the unpredictable. Shop around and find a plan that fits your budget and your needs. Do you have a home office? What about pets? Take these types of things into consideration when looking at your options. Check out CoverHound for an easy way to compare insurance plans.