For most of us, our home is the biggest investment that we ever make. It is also one of the few investments that we can live in and enjoy for many years to come. Purchasing that home is not a matter to be taken lightly.
Now is prime time for purchasing (and selling) homes. If you are buying a home, you may find that the competition is sharp. Zillow, an online home marketing website, reports that there will be 3 percent fewer homes on the market nationwide than last year. As a result of this smaller inventory, Zillow reports home values are up 7.2 percent.
When it comes to home buying, Alaska sometimes dances to its own tune. In checking around with lenders in the area, they agree with the Zillow report regarding the low inventory of available homes. Locally, it seems there are more buyers than houses available for purchase.
Regardless of what the market is doing, if it is time to buy, you still need to take the time to be prepared. Here are some steps you can do to make the most of your home-shopping quest.
Start early and don’t procrastinate. Zillow states that the average home buyer spends over four months in the home search and only 46 percent get the first home they make an offer on. So it is important that you recognize that a good deal takes time. The more homes you look at, the more you will be able to evaluate the market, both when it comes to pricing and availability.
Do your homework prior to viewing. Get preapproved by a lender. That will give you an idea of what you can afford and what the purchase will mean to your budget. There are two rules of thumb when it comes to home prices. The first says that you can spend up to 2.5 times your annual income for a home. The second says that you should pay no more than 30 to 40 percent of your monthly income on a home. However, only you can evaluate your ability to make that payment.
Take a close look at all your finances before you commit to a price range. Consider your current debt and financial obligations, and take a guess at your future before you start looking. Take a conservative look at your finances and plan for that. That will help you avoid spending too much and having difficulties making the payment.
Search wisely. Take advantage of internet resources. Sign up for automatic notifications from websites so you will know when anything new comes on the market. Spend some time checking out the online resources for real estate offerings. Today’s sites have a ton of pictures that can help you view homes before you set foot in them. The pictures will give you an idea of the feel and layout of a home to help you narrow your search to your favorite few houses, saving you lots of time. Remember that pictures can disguise imperfections, so be sure to carefully evaluate the homes in person before placing an offer.
Think about extra costs. Don’t focus solely on the purchase price or the monthly payment. There are lots of other costs that may come up as you purchase your home. Taxes, insurance, home repairs, replacement of appliances and remodeling can add to your costs of moving into a home. If there are repairs or remodeling that must take place prior to living in the house, make sure you include these costs in your financial estimates.
Stick to your budget. First-time buyers are particularly susceptible to inflating the budget. Don’t get carried away and buy more house than you can afford. An interruption in employment or unexpected expenses can cause you to lose any gained equity and your favorable credit score if you can’t keep up the payments.
A home can be an excellent investment and a great place to live. But make sure you understand all the factors of home ownership before you commit to an agreement.
Roxie Rodgers Dinstel is associate director of the Cooperative Extension Service, a part of the University of Alaska Fairbanks, working in cooperation with the U.S. Department of Agriculture. Questions or column requests can be e-mailed to her at firstname.lastname@example.org or by calling (907)474-7201