As the housing market begins to improve in the northeastern states, many families and individuals are looking into the idea of buying a house in Massachusetts. While it may seem like any other type of investment, buying a house is a completely different prospect than anything else you have ever purchased. Costing ten times or more than a brand new vehicle, buying a house is a huge investment that you shouldn’t take lightly. This article will focus on the ten things that you need to know before you even consider buying a house.
#1 – Make Sure You Are Permanent
Don’t buy a house if you won’t be staying in the area very long. With all of the closing fees, transaction costs and other associated expenses that come during the purchase of a new home, it is not worth it to invest in real estate property unless you are going to be living there for a minimum of five years. While you will hear stories about house flippers that purchase low, spend time remodeling or renovating a home and then turning around and re-selling it for a profit, most people just can’t achieve those types of goals. Speak with your local credit union representative about home loans and savings account opportunities that will help you when you are ready to buy a house.
#2 – Get Your Credit in Order
Start working on your credit several months before you are ready to start shopping for a new home. Applying for a mortgage at your local credit union is a great way to get the ball rolling, but you’ll want to look at your credit and make sure there aren’t any surprises. Speak with your representative at St. Anne Credit Union in New Bedford to find out more about the criteria that they are looking for when they review home loan applications so your credit report will be in order when you begin the process of buying a house in Massachusetts.
#3 – Figure Out How Much House You Can Afford
Sit down and do the math. The general finance rule of thumb for housing states that you should not get a mortgage payment that is more than a third of your total household income. Most people can afford to make payments on a home that is financed for two and a half times their annual salary, so if you make $50,000 a year, you can feasibly look at homes that are around $125,000. Double-check with your local credit union to make sure you fit their criteria as well.
#4 – Get a Down Payment Together
Another rule of thumb is a 20 percent down payment. For a $200,000 home, that would be $40,000. Speak with your representative about required down payments for buying a house in Massachusetts to make sure that there aren’t any additional requirements or programs that you should look into to get your down payment together. Take advantage of your local credit union’s share savings and investment savings programs to help grow your money so you can afford the down payment without having to take any additional loans or pay a premium rate.
#5 – Check the Neighborhood
When you find a house that is in your price range, make sure to check out the neighborhood. Visit during the day and at night. Visit during the week and on the weekend. If possible, check out the neighborhood on a busy holiday weekend. Check with local law enforcement for the crime rating of the neighborhood and don’t be afraid to ask questions. Check to see that the schools in the area are good, and visit the local school, if possible. Even if you don’t have children, a good school district can boost property values when it comes time to sell your home in the future.
#6 – Work With Professionals
Every person you work with, from your real estate agent to your loan officer at the local credit union, should be a professional in their area. Make sure that each person also has your best interests at heart and that they can help you if you have questions at any time throughout the process of buying a house in Massachusetts.
#7 – Learn About Points and Rate
Before you speak with a salesperson or talk to an agency, make sure to take time to educate yourself about paying points and what you can do to lower your interest rate. If you have plans on staying in the home for a couple of years, it can be in your best interest to take points in lieu of higher interest rates. Ask your representative at St. Anne Credit Union in New Bedford if you have any questions.
#8 – Do Your Homework
Before you make a bid, check on sales of similarly-sized and designed homes in the same neighborhood. Consider home sales as far back as the last three months. If those homes sold for five percent or more less than the asking price, consider making a counter offer at a lower rate. Go about three to five percent lower than the actual sales price of those other homes that sold in the neighborhood as a starting point.
#9 – Hire Your Own Home Inspector
While the credit union will require a home appraisal and the area that you live may require a complete home inspection, it is important to hire your own independent home inspector to look over the home you are interested in purchasing to make sure it is worth the price you are thinking about paying. Make sure that the inspector is experienced, an engineer or architect is preferred, and that they have experience inspecting homes in your area. This will help you avoid buying into problems that you can’t afford to fix.
#10 – Get Pre-Approved Home Loans
Contact your credit union in New Bedford to find out more about getting pre-approved when you are looking at buying a house in Massachusetts. In some cases, your local credit union will help you to shop home loans ahead of time, giving you a strong “buying power” that will help you to secure the home you want without having to wait for the approval process. This will also help you to know how much you are approved to buy a home for, helping you to stay within your budget and your means. Call St. Anne Credit Union in New Bedford to get started today!