7 Things To Do Before Buying a House

1. Recognize home-buying as an investment.

For many military personnel aboard Camp Lejeune and MCAS New River, the Jacksonville, North Carolina area is not a permanent location.  However, the basic-allowance-for-housing, or BAH, is generous enough to cover a mortgage.  Many times, the mortgage ends up being cheaper than a comparable rental in the area.  Investing your BAH in your own mortgage can only help you in the long term, in most cases.

2. Ask yourself a lot of questions before you buy.

Buying a home can be of the biggest purchases in your life. Make sure you're making the right decision by answering questions about how this will better suit your long term goals:

• Is this a smart move?
• Do you need a house with a yard for a growing family or your beloved pooches?
• Are you tired of mowing a lawn and think a condo might be more suitable?
• Who will be responsible for the maintenance when I'm gone?
• What will be the return on my investment, should I decide to rent it or sell it?

Qualified Accredited Buyer's Representatives (ABR®) can better help you protect your interests.  Read more about this designation here.  Not every REALTOR® is an ABR®!

3. Don't rush into a home purchase.

Be methodical and make a well considered decision.  The real estate market in Jacksonville, North Carolina is ever changing.  When you think you've found "the one", it's time to negotiate the best deal!  

Spend time making sure your credit reports are in shipshape to get the best rates offered when you decide to buy. You can check your reports free once per year at www.annualcreditreport.com.

Food for thought: a 1% difference in a $200,000 mortgage can cost you more than $45,000 in additional interest over the life of a 30-year loan.

4. Focus on what you can afford.

Lenders will check your debt-to-income ratio. That is how much money is coming in versus going out in debt payments.

Here's how to calculate debt-to-income ratio before you start loan shopping: Add up all of your debt payments including mortgage principal, property taxes and insurance plus other recurring debt like credit card, student loan and car payments and do the math. Your ratio should be 36% or less. You want to do what ever you can to stay out of the debt danger zone.

If you gross $5,000 per month (before-tax income) you should not pay out more than $1,800 per month toward those bills. If you are, your credit-to-income ratio is not ideal. Remember: just because your lender says you qualify for a particular loan amount doesn't mean you can afford it.

If everything else is on target, buy a home you can comfortably afford on one income. That gives a couple some financial wiggle room in case one partner loses a job or decides to be a full-time parent.

5. Maximize your tax benefits.

As the tax law stands now, mortgage interest is generally tax deductible, which is great incentive for you to buy a home. You can lower your taxable income by the amount you pay in property taxes and interest.

Here's an example: If you earn $60,000 in gross income, and pay $10,000 in interest and another $2,000 in property tax, you can lower your taxable income to $48,000.

6. Build a move-in fund.

In addition to your earnest money deposit, appraisal fee and home inspection fee, you'll need a move-in fund to cover closing costs, furniture and other stuff that you didn't need in an apartment — like a lawnmower, for example.  

7. When in doubt, rent.

All of these tips may make you wonder if you're truly ready to buy. No problem, rent instead. Ultimately, putting off the purchase until you're truly ready — both financially and career-wise — carries much less risk than leaping before you look. 

Give me a call! I'm more than happy to help you with all of your real estate needs, and I'm never too busy for any of your referrals!!