By Chuck Bentley
Purchasing a home is typically the largest financial investment any of us will ever make. It helps to follow a checklist of precautions to be sure you do not make a mistake.
First, be sure you can really afford it. Determine how much you can put toward a down payment to avoid PMI—or private mortgage insurance. This normally means a 20 percent down payment. Next, include your costs for moving, utility deposits, window treatments, insurance, taxes, and maintenance. Add those costs to your out-of-pocket expenses. Be sure you still have enough in cash reserves after the purchase. Also, be sure your mortgage payment is not greater than 25 percent of your net spendable income (your gross income minus tithe and taxes). Also carefully consider all additional costs associated with home ownership: utilities, homeowner’s insurance, association fees, property taxes, maintenance, and so on.
If you can afford the home, it’s time to start pre-qualifying for low-cost financing. Shop for the best mortgage rates. Use bankrate.com to get educated on all the options and mortgage rates. Be cautious here.
Once you find the home you are interested in, before making an offer, do some serious investigation of the neighborhood. You need to know about crime rates, traffic or noise issues, future zoning plans, and the quality of the schools in the area. You can find lots of this information online, or visit the county planning office. Also, ask the seller for 12 months of past utility bills. You want to check the cost of electricity, gas, water, trash collection, and even security monitoring. This will give you much needed information before you decide to go forward with the offer.
If everything checks out, make a written offer on a contract in which you clearly understand all the terms and requirements. Everything should be spelled out in writing. Always make your offer contingent upon an inspection. Pay for a highly reputable inspector to check the property for termites, structural damage, potential high cost repair on appliances, the foundation, plumbing, and the roof.
Remember that it is the major purchases we make that often cause us the most challenges to our budget. Ask God to give you wisdom and peace before you purchase your home.
Originally posted 5/4/2015.
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