Guide | Budgeting
What You Should Consider When Preparing to Buy a Home
Taking the steps toward homeownership is complex, but a home is one of the most rewarding purchases you’ll ever make. Homeownership comes with a big financial responsibility, but we are here to help you along the way. We’re sharing things to consider when preparing to buy a house.
Buying a house is an exciting milestone in life, but there are a few things to consider before purchasing your home. Our checklist is a great place to begin your home buying journey, and below we share important questions to ask yourself before you buy a home.
Do You Plan to Live in the Area for a Few Years?
Buying a home instead of renting means you have the freedom to stay in one place for as long as you’d like without worrying about landlords or renewing leases. However, you should keep a couple factors in mind when deciding whether buying is right for you. First, do you plan on living in the home for at least a few years? Despite popular belief, buying isn’t always a better financial option than renting. If you don’t plan on living in the home, or renting it out for about five years, you could take a hit financially depending on your location. Follow our rent vs. buy guide to help you make the best decision for you and your family.
Second, figure out what neighborhood and type of home you would like. If you plan on growing your family, make sure you have enough bedrooms and consider what schools are in the area. You will also want to check how safe the neighborhood you’re considering is and the proximity to hospitals, entertainment venues, shopping and other places that you will want to visit frequently.
If you’re purchasing a new manufactured home but don’t own land, you will need to factor in buying land and having a contractor perform a property assessment. To help with this process, you can work with your home center or a local real estate agent to find the best property for your new home.
What Are the Costs of Buying and Living in a Home?
First, determine your budget. Avoid basing your budget on the maximum amount you may be able to borrow. A good rule of thumb when determining what homes fit within your budget is to not buy a home that’s more than 30% of your household’s gross monthly income. When determining your budget, factor in these additional expenses:
Homeowner’s Insurance: An insurance company can help determine this cost. Talking with a company you have other policies through, such as your car insurance, may help you qualify for a multi-line discount because packaging policies together typically helps save money.
To help you determine your total payments including taxes and insurance, use our mobile home financing calculator.
Utility Costs: Electric, gas and water bills will vary greatly depending on several factors, such as the location of the home, the age of the home and its level of energy efficiency, making it important to keep in mind when shopping for a home. A good rule of thumb is to factor between 10% to 20% off your gross monthly income for utility costs. You could also find out the estimated cost of the utility bills if you know the county you want to live with a little research. Call the utility providers in the area (Most areas have one or two major providers.) to figure out if they service the county you’re interested in. Once you find the provider, ask for a 12-month high and low bill or ask for an average monthly cost of similar-sized homes in the area. This will give you a better idea of what your utility bills will cost so you can factor it in to your budget.
Maintenance: Another cost to consider is maintenance, which includes fixing any damages to the house (if it’s pre-owned), landscape and gardening, and other routine maintenance costs like air filters, gutter cleaning, minor leaks, etc. Talk with your household and determine an amount you’d like to set aside for these costs and account for any emergency maintenance like frozen pipes or a damaged roof.
Can You Afford to Furnish Your Home?
In addition to the initial expense of buying a home, you will need to furnish it. When determining your budget, consider what household items you currently don’t have but will need when you first move in. These items can include a refrigerator, a lawn mower, washer and dryer, beds and other essential furniture. Of course, you don’t need to furnish the entire home immediately, but factor in any items you can’t live without.
Do You Have Money Saved for a Down Payment?
Your lender can tell you how much money you will need for a down payment. A traditional amount for a down payment is typically 20%, but the more you put down on the home, the quicker you can pay it off. Learn more about how you can save money for a down payment with our tips.
Following these tips will help you decide if buying a home is right for you. If you’re ready to start your journey, our home loan guide for first-time buyers will help you take those first steps toward your dream.
Explore the Vanderbilt Home Loan Guide for First-Time Home Buyers
Guide | Home Buying
Guide | Home Buying
Guide | Home Buying
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