If you’re going to be purchasing real estate in the near future, then there’s no denying there will be many crucial things you need to take into consideration before you make a purchase.
Of course, this fact is made even more important if you’re relatively new to the real estate market, and perhaps buying a first home or your very first investment property.
In this guide, we’re going to highlight five things you will need to consider when you’re purchasing real estate, so without any delay, let’s get started.
1 – make sure you have a 20% down payment
One of the smartest things you can do whenever you are purchasing a new home is to make sure you have a 20% down payment that you’re ready to part with in order to secure the property.
While you may be able to get a respectable mortgage deal without this in place, it’s safe to say that you could end up paying back more money in the long run if you don’t have this money ready to secure your purchase.
In general, your bank will consider you a higher risk client if you don’t have the funds to secure a 20% deposit, and this could mean you’ll end up paying more in mortgage insurance fees and interest rates than you otherwise would have to do.
2 – always get your mortgage loan preapproved
Another crucial thing to do when you’re first entering the real estate market is to get preapproval for your mortgage loan.
As you’d expect, pre-approval gives you a realistic, tangible dollar value for how much you can spend without having to get further approval from your bank, and this can really free you up when it comes to browsing all of your available purchase options.
Furthermore, it will show sellers that you are a serious buyer who has the ability to make an offer without running into problems with the bank later on down the line.
3 – understand the difficulties you may face when flipping
If you are a first-time investment buyer who is perhaps looking to purchase a fixer-upper in the hopes of making a tidy profit later on, then it’s very important to understand that this will require a great deal of sweat equity, and it isn’t always as simple as it may appear at first glance.
Of course, while many people achieve great success by house flipping after renovating a home, you will need to have the time, skills, and inclination to put in many hours in order to add real value to the final selling price.
4– location, location, location
While the overwhelming focus on location has become somewhat of a cliché in the real estate world, there’s no denying that there’s a great deal of truth to it, and this fact will not only affect the value of your property, but it will also go a long way towards influencing your overall living experience in your new home as well.
For example, it’s always wise to pick a home that’s situated within a reasonable commuting distance so you won’t have to travel further than you want to every day. Additionally, the location can have a big impact on your ability to enjoy the local amenities, and it can also affect the quality of schools you’ll be sending your children to, and a whole lot more.
5 –check your ROI
If you are planning to purchase real estate as a long-term investment, then it’s always wise to check your overall risk profile and know what you’re getting into.
While it’s certainly a truism that rental properties can be a smart, low-risk form of investment to make, there will always be risks involved, so you shouldn’t ignore each and every factor when it comes to making a decision.
It’s also worth noting that you could see a number of added costs thrown into your deal, so it’s important to be aware of closing fees, taxes, down payments, as well as the potential for property appreciation, rental income, and tax savings.
Regardless of whether you are looking to purchase a new home for sale or simply buying a first-time investment, it’s always important to keep these five considerations in mind before you make any final decisions on what your next step will be.