Before you decide whether you want a 3 or 4 bedroom home, you need to figure out what you can afford. That means taking inventory of your income, expenses, assets, savings and debts. Once you know where you stand it's time to sit down with a financial adviser and review your monthly cash flow vs. the price of home you can afford.
2. Have you considered all the hidden costs?
Many people reason that if their potential mortgage payment would be less than their current rent payments, they should buy a home. The problem is, they're forgetting all the hidden costs of home ownership. Consider property taxes, home owner's insurance, Realtor fees, closing fees, utilities and maintenance. They add up!
3. What will your life look like in five years?
While you might be financially ready to buy a home, it might not make sense with your current career path or relationship. Is it possible you could be transferred to another office? If you're looking with someone else, are they considering grad school in the future? Just because interest rates are low right now, and you've crunched numbers enough to know you can afford the move, is it something you want to commit to? One of the most expensive assets you're ever going to invest in is your home, you want to be ready to take on that responsibility.
4. What kind of neighborhood do you want?
If you're a younger buyer, being in a metropolitan area might be important to your decision. If you're thinking about starting a family in the near future, you may want to consider the quality of local schools, access to public parks and neighborhood safety. Decide on a few areas you're interested in and start checking out the price range for homes. It's good to start looking a full year in advance do you have time to review as many options as possible.
5. Are you working with the right Realtor?
Just like any other financial relationship, your Realtor must mesh with what you want for yourself. Don't be afraid to conduct mini interviews with a few Realtors to compare the differences in personality and availability. One mistake many people make is using a Realtor just because they're a friend or relative, not because they're familiar with the right area. You owe it to yourself to work with someone who has the knowledge and expertise for the region you want to live.