Home is where the heart is—the center of your family’s life, a place where you share joys and milestones with loved ones. But when you buy a home, it's also an investment; a home is often one of a homeowner’s biggest assets! For an average homeowner, the home represents 62 percent of total assets. These tips can help you get the biggest bang for your homeowner buck both before you buy and once you’ve become a homeowner.
Here’s what you should consider before buying a home.
Buy a home that fits your budget comfortably. Before you begin house hunting, carefully scrutinize your finances. Be sure to consider all the extra expenses of homeownership, such as taxes, insurance, homeowners association fees (if any), utilities and maintenance, and note that those costs will likely rise as the years go by. Being pre-approved for a mortgage is a good way to learn how much money a lender is willing to give you, but keep in mind that you may not want to take out as large a mortgage as you can, especially if you have other important goals, such as saving for retirement or college expenses for your kids.
Don’t drain your savings for the down payment. Everyone—and especially a homeowner—needs emergency savings. When you buy a home, you’re purchasing some potential major expenses (think leaky roof, faulty furnace, broken appliances, etc.). You need to be prepared to cover them without racking up a bunch of debt.
Be prepared to stay put. If you anticipate having to move within a few years, you might want to wait to buy a home. Upfront costs like moving expenses, real estate agent commissions and closing costs become a smaller percentage of your total housing outlay the longer you stay in the home.
Don’t buy the most expensive home in the neighborhood. Don’t remodel to make your home pricier than all your neighbors’, either. When you sell your home, real estate agents will compare your home to others in the neighborhood that have sold recently. If they’re all priced lower, it could drag down the price on your home, unless you can clearly demonstrate features that make your home stand out.
Choose the location carefully. The quality of the schools, nearby shopping, parks and other neighborhood amenities will affect both your quality of life as a homeowner and your home’s resale value when you decide to sell. Find out if there are plans for major changes in the area—perhaps a freeway coming through or a shopping mall being built—that could affect the potential for long-term appreciation. The local municipality’s planning department should be able to provide you with this information.
There are lots of things you can do to protect and even increase the value of the home you own. Here are few things to consider.
Make small repairs promptly. Left undone, minor maintenance issues can quickly lead to significant damage that will cost thousands of dollars to repair. For example, not replacing the filter on a furnace can shorten its life span, and ignoring a leaky faucet can lead to water damage like warped cabinets and mold and mildew growth.
Research before remodeling. If you plan to sell soon after a renovation, it could pay to learn about trends in what homebuyers want and which projects can help you recoup more of your costs.
Go for quality when you remodel. Skimping on materials can lead to a result you’re not happy with and could depress the sale price rather than adding value when you decide to sell. The same goes for quality workmanship. For most projects, it’s better to hire an experienced, professional contractor who will pull all the necessary permits and do good quality work.
When you’re ready to buy or remodel, choose a mortgage or home equity loan that’s right. Click here to find a financial partner to help guide you through the process.