By: Ariana De La Cerda
Purchasing a home is one of the biggest purchases one will make as they enter their adult years. This purchase proves the responsibility for money, shows how all the investments and savings over the years come into play, and really tests the decision making of the buyer. This process seems super exciting, and new homeowners are typically eager to start their new life in a new home. However, some people may overlook all the technicalities and important financial questions that need to be addressed first. For this blog post, I will be going over the most important financial questions you need to ask yourself before making this large purchase, and why these questions must be addressed in order for you to maintain financial stability.
Here are the basic steps you need to take when preparing to buy your house: Understand why your making this purchase, check your credit score, create a housing budget, save for a down payment, shop for a mortgage, hire the real estate agent, see multiple homes, make the offer, get a home inspection, negotiate repairs and credits, secure your financing, do a final walkthrough, then, finally, close on the house. There you go! Now you may be thinking: Why do I need all of these? Now it’s time to get into the logistics and explain why you have to embrace the process.
The first thing I mentioned was understanding why you’re making this purchase. This is pretty self-explanatory: Starting a family? Starting a new job near this home? Finally, feel financially stable enough? Just ask yourself first. Second, check your credit score. According to Natalie Issa, head of communications at Day One Management Ventures, “Everything from qualifying for a credit card or an auto loan to getting utility services or renting an apartment can be impacted by how good your credit score is.” So, you should definitely have a stable credit score in order to qualify for loans and financial security. Third, you must create a housing budget. This is so critical in this process because you need to be sure your money is balanced and ready for this purchase. As Ms. Straub has taught us this semester, creating a budget is one of the most important financial processes you will ever go through!
Saving for a down payment is crucial to the process because it lowers the overall payment cost per month and over time, and increases the equity on the house. My dad, who works in finance, said this can also help with better interest rates on the house in the long run. Shopping a mortgage is beneficial in the aspect that you could be available for loans and reduced fees. Hiring the real estate agent will assure you get the house you desire and will help you feel more secure. Home inspections and walkthroughs are important to ensure you don’t miss any stand-out repairs or undesirables that you would have to deal with yourself; this also ties in with negotiating repairs, seeing as some of them should not have to be your responsibility. Then, after taking all the appropriate precautions, make the call! You have been responsible and followed all the steps. Congrats, homeowner!
Works Cited:
Lee, Jeanne. “How to buy a house in 2020.” Bankrate, Jan. 8 2020
https://www.bankrate.com/real-estate/how-to-buy-a-house/
Issa, Natalie. “What Credit Score Do I Need to Buy a House?” Credit.com, Feb. 28, 2019
https://www.credit.com/loans/mortgage-questions/check-your-credit-score-report-before-buying-home/
Becker, Matt. “7 Financial Questions to Ask Yourself Before Buying a House.” Mom and Dad Money, Feb. 20, 2019
https://momanddadmoney.com/7-financial-questions-to-ask-yourself-before-buying-a-house/
Ramsey, Dave. “How to Save a Down Payment for a House.” Ramsey Solutions, 2020
https://www.daveramsey.com/blog/save-down-payment-while-renting
REBAC. “Need a Mortgage? Why and how you should shop around.” National Association of Realtors, Sep. 26, 2019
https://homebuying.realtor/content/need-mortgage-why-and-how-you-should-shop-around
This was really informative outlook on steps to look before buying a house. I think most people today struggle with mortgage loans due to the pressure from the environment and fail to look at their situation and how the consequences of not being prepared in the present, can affect them in the future.
ReplyDeleteAs a high school student, I don't find myself thinking about buying a home very often. Although, I think bringing this topic to the forefront is really important because the path to buying a home starts now! Like you talked about, we will have to put a down payment on a house in order to get certain benefits, and in order to make a down payment we are going to need money. If we keep this in mind, we should start saving now, and if we put away a little bit of money every month, we will be well on our way to this momentous milestone in our lives!
ReplyDeleteThis is a great topic to start having kids in high school think about. It is a huge thing adults have to do and they should be prepared when buying a house so introducing this now and getting kids to learn what it means to buy a house is a great idea. You brought up a lot of great points and one point about the down payment I believe is one of the most important. If you are able to bring a good down payment then that will make the house a lot cheaper. You could negotiate for a lower price if you are able to pay up front.
ReplyDeleteThis was really helpful in terms of things to keep in mind when buying a home. I did not know that the amount of your downpayment can affect your interest rate, but it totally makes sense. There's a lot of financial choices and factors to consider when buying a home, but I also thought of lifestyle factors when you talked about a family; I think it's important to know what schools the house/neighborhood are districted for, too.
ReplyDeleteVery interesting, being this young it's pretty hard to start thinking about a house or a home. As for buying there's a lot of negotiating that could happen. Being financially stable was also a good point since there's really no good way to not be stable and own a good house at the same time.
ReplyDeleteThis was a good topic but its so weird to think about that right now. Something I didn't know was that the amount you put down can change your interest rate!
ReplyDeleteThere's a lot to keep in mind when buying a house, which can be overwhelming for many adults. Not only do you have to budget for the house, but you have to buy everything that goes inside the house, too (furniture, dishes, decorations, etc.) If a person budgets for all of that, they're much more likely to be successful when buying a house.
ReplyDeleteThis is a good blog post because I never knew the steps of buying a house and what questions to ask myself when it's time to buy a house. This will help me in the furture when I find a house. Good Job, Ari! and I plan to be financail stable when buying a house in the future.
ReplyDeleteEven though we are far from buying a home, this is a good topic to think about. If you start budgeting early and saving up for a home now, then you'll be more prepared for the future.
ReplyDeleteIt is an interesting topic to think about as a kid because many of us grew up living in homes and haven't really thought about all the steps it takes to actually owning and buying a home. There are some steps that I found interesting in this article, like asking yourself why you are buying a home, I never would have thought to stop and ask myself that first. But I feel that every step of the process is important to ensuring you have the best house for you.
ReplyDeleteIt is very interesting to think that in a little more than 4 years, a lot of us will start to look for a home to start a family. Your post gives insight to the struggles of a person beginning the process of buying a home. A lot of times we can leap into a decision without understanding the ramifications. it is really beneficial to weight your options and use these facts to determine whether you should consider buying a home. - Logan T.
ReplyDeleteI thought it was really interesting how short of a time we have until we are actually going out to buy a house and start a family. Your post gave me a lot of incite how to prepare for my upcoming future and beyond.
ReplyDeleteAt this point in my life, buying a house isn't my top priority but it isn't that far down the road. I will for sure remember these when it comes time because I knew very little about purchasing a house.
ReplyDeleteWhile I am not in the stage of my life where I am anywhere near thinking about buying a house, this article brought up some important points that I can apply to my current life. I should maybe start considering getting a credit card to build up my credit score, and I need to spend more time creating budgets for myself so that my money is well managed. Then, hopefully, down the road my decision to buy a house will be easier.
ReplyDeleteI think you did a great job of laying out the reality of buying a house. I really didn't know all the steps that went into purchasing a home and when you listed them off I was honestly a bit surprised at how much goes into it. You did a great job of talking more logistics after that and really making it seem like an achievable thing for all of us in the future.
ReplyDeleteEven though I'm not a spot where I'm looking to buy a house, this piece brought up topics and some information that I can apply to life now and hopefully in the future. Your article was a great read! And while there weren't any graphs or tables, your graphics helped pull the whole piece together!
ReplyDeleteBuying a house is obviously an extremely important purchase in one's life. As you mentioned, setting a budget and making smart choices in the process is very important, as this purchase will greatly change your life. You stated that the down payment could decrease interest rates on your mortgage in the long run. This seems very important (although I have never bought a house, obviously) as having a low interest rate could save you thousands of dollars, especially when mortgages can last 30 years, as some do. This blog is very insightful on buying a house and will become a big part of many of our lives in the years to come.
ReplyDeleteThis blog post is really interesting. I never thought about all of the steps that are involved in buying a house. In your second paragraph you mention that the understanding of the purchase can be easily self-explanatory, but for some the reason can be more complicated. Every person who buys a house, purchases it for their own personal reasons which is why different people need different types of houses. Which then leads to your next point on hiring a real estate agent who will help people find the perfect house that fits their specific requirements. Although my parents probably already know these steps, it will be interesting to see how they follow them since we are looking to buy a house soon after this quarantine is over. But overall, as you stated the most important part is keeping a monitored budget that will help keep you financially stable when purchasing a forever home.
ReplyDeleteOne tip that you mentioned that is extremely crucial for any person seriously considering a certain house is to get a home inspection before actually buying the house, and I did not know about this aspect of buying a home until recently. In a financial sense, the inspection could potential reveal severe damage or illegal construction of the home that has been hidden from the initial walk through of the house and would cost the home-owners a great deal of money to fix. I think you did a great job of hitting all key components that go into consideration before buying a home.
ReplyDeleteThis blog post was very refreshing to read after all the ones about covid-19!! I thought it was super interesting when you brought up the first steps of buying a house and how it may seem overwhelming, but in reality is less stressful if you do it the right way. I learned a lot when you got into the actual process of what it takes to buy a home. I have heard of a mortgage, down payment, getting a home inspection, and repairs along with your credit score, but I never knew how that would truly impact that process of selling your home and then eventually buying a new one. Overall your blog was very informative and super interesting!! -Ellie A
ReplyDeleteI really liked this post, as some of us draw closer to making these decisions, it's important we get information. I agree with the good credit score, although most parents don't want to hand out a credit card to a 17 year old. The younger you get a credit card even if it's only used for gas, you will get a better credit score. My sister has a good score but found if she would've gotten her card sooner her score would be better.
ReplyDeleteThis was an interesting read especially with the state of the economy at this point in time. Generally, the housing market doesn't thrive during recessions (does any market?). In light of this, it's even more critical to intensely weigh your options before deciding to buy a house right now. Thanks for sharing!
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