Friday, November 15, 2013

Buying a home: Step 2 – Choose a location

So in my last post, I mentioned that it was important to understand your means before you choose a location. You might be asking yourself, "why?" Well, it's simple really: some locations are more affordable than others. Until you know what you can really afford, you don't know if it's even possible to buy a house that's, let's say... 10 minutes from the city. 

There will always have to be a balance, a compromise, between your wish list and location. Even if location is your number one priority, it is still important to understand what you can afford and what that will buy you in your dream location. There's no point in falling in love with a 4 bed, 3 bath, single family home in Arlington, VA when  your budget will only get you a 2 bedroom condo in that location. Then the question becomes: do you buy the condo to be in your dream location, or do you move out from the city a bit to get more of what you're looking for? The choice is yours.

When it comes to picking a location, there many things to consider, such as lifestyle, distance from work, school district, amenities, etc. All of these things are important. If you like to be able to walk to shops and restaurants, then you probably don't want to buy a house in a rural area. Perhaps you don't want to be more than a 30 minute drive to work. (Keep in mind the times at which you will be driving when measuring this distance. If you work a 9-5 job in Northern VA or DC, a 30 minute drive may only be 10-15 miles.) 

Now, some of you may be thinking, "School district? Why is that important? I don't even have kids!" Well it's always important to think about the future, and I mean that in a few ways. Whether you have kids, want kids in the future, or you never want to have kids at all, it's still a good idea to consider the school district for one very good reason: RESALE. Maybe you never want to have kids, so you really don't care what school district your house is in, but particularly if you are buying a single family or townhouse, when you decide to sell your house, a large part of the population that you're marketing to will have kids or want kids. So if you buy a house in a good school district, it will be easier to sell and you will likely get a better return on your investment. This is not to say that if you buy a house in a "poor" or "less-than-ideal" school district, you will never be able to sell it. You just may not see as big of an increase in your property's value as you would in a more desirable area, or it may take longer to sell. 

Taking all of these things into consideration should help you narrow down your location. It's helpful at this part of the process to speak with a Realtor. Hopefully this is someone who you already know and trust or a Realtor that was referred to you by someone you know and trust. Your Realtor will be able to help you when choosing a location, especially if you're not set on somewhere specific. If you tell him/her what kind of location you are looking for, a good Realtor will be able to give you some suggestions. Keep an open mind and don't be afraid to look in an area that you're not as familiar with. You may fall in love with an area that you never expected! 

Just remember that you need to be happy with the location and not just the house. You can always make changes to your house (there are limits on this of course), but no matter what you do, you can't change the location. You don't want to find yourself saying, "This is the perfect house! If we could just pick it up and move it to another neighborhood...." 

Saturday, November 2, 2013

Buying a home: Step 1 – Understand your means

Buying a home can be very scary, especially if it’s your first time. That can be true for anything new you try! As with anything new, it’s important that you understand the process and plan ahead. The first step in the process of buying a home (whether it’s your first home or your tenth!) is to understand your means.

It’s very important to talk to a mortgage broker to understand a) IF you qualify to buy a home and b) what amount of money you qualify to borrow. However, just because you qualify for a certain amount, doesn’t mean you can actually afford the monthly payments! It all depends on your lifestyle. Do you like to travel? Do you go out to eat a lot? Are you a fashion fanatic? All of these things and more will impact how much you can afford when buying a home, unless you want to change your lifestyle completely. And who wants that? No one wants to be house-poor… right?

When talking to your lender, make sure to ask questions so that you understand what the payments will be at different price points. You may qualify for a $500,000 mortgage, but how much do you have to put down? What will the payments be? How much will the payment be on a $400,000 house? You get the point. Then go home and run the numbers. You have to decide if there’s any part of your current lifestyle that you’re willing to sacrifice to buy a home. Or maybe you won’t have to sacrifice anything, but you will need to prioritize so that you can understand what sort of monthly payment will be comfortable for you, without having to resort to eating ramen noodles for dinner every night.

Not all Mortgage brokers are the same. Make sure you speak with more than one and understand that the size of the bank or banks they represent might impact the size of the loan you qualify for and the rate you’re quoted. Bigger is NOT always better when it comes to banks. If you need help finding a good lender – feel free to reach out to me.

Sit down with your family and put a budget together. Decide how much you’re willing to pay per month, what that translates into for a 30 year mortgage, and stick with it!

PS – There’s a reason why Step 1 is ‘Understand your means’ and not ‘Choose a location’. Stay tuned.