Are you tired of renting? Do you want to put your monthly payments toward a property you own, instead of handing them over to a landlord? You’re not alone. According to NerdWallet’s 2018 Home Buyer Report, some 32 percent of Americans are planning to buy a home within the next five years, and their major motivation is their belief that buying a home will be a good investment (source). If you’re wondering how to invest in a house, ask yourself the questions below to get started.
How to Invest in a House
Why Are You Buying a Home?
Since you’re exploring how to invest in a house, you’re obviously hoping to make a smart financial move with this purchase, but consider the other reasons you wish to buy a house right now. Are quality rentals rare in your area? Do you have your eye on a specific neighborhood or school district? Are there certain features that you want in a home? Why do you want to be a homeowner? As The Truth About Mortgage points out, there are many reasons why people choose to buy a house. Understanding all of your goals will help you make good decisions as you navigate the homebuying process.
What Do Your Finances Look Like?
Make sure your finances are in good order before you begin shopping for a home (source). If you haven’t already done so, request your credit reports and check your credit score. Then, make a budget so that you can clearly see your monthly income and where it goes. This will help you determine how much you can really afford to pay for a monthly mortgage payment. While a down payment isn’t always a necessity, it’s also smart to take a look at your resources and determine how much of a down payment you would be able to make while still maintaining a reserve for emergencies.
How Much Can You Afford to Invest?
Getting your personal finances in order is good preparation for your next task: determining how much you can truly afford to invest in a home. There are several online calculators that will let you play with the numbers to get a rough idea of how much you can buy with the monthly payment that you feel you can afford.
Next, select a lender and begin the process of securing preapproval (source). Consulting a lender is a good way to explore your financing options and the preapproval process will allow you to find out how much the bank is actually willing to lend you. Performing this simple step before you start shopping for a house allows you to narrow your search and avoid wasting time on properties that are out of your price range.
How Do You Find the Right Home?
There are many tools designed to match prospective buyers with homes for sale. You may take online tours, attend open houses, or enlist the aid of an experienced real estate professional. Whatever tack you decide to take, when you’re approaching a home as an investment, you’ll need to find a home that suits your lifestyle and your wallet. As U.S. News & World Report indicates, that means that in addition to thinking about things like the home’s floor plan, structural integrity, and the desirability of its location, you’ll want to consider how its total price tag and the costs of ownership stack up in comparison to the likelihood of appreciation, the prospective resale value, and the advantages offered by building equity. Doing the math will help you figure out if you’re likely to see a good return on your investment.
Are you ready to take the plunge and dive into the housing market? Count on PrimeLending of Springfield for the expert insight and guidance you need to proceed with confidence. Our friendly, knowledgeable team can help you find the right loan product for your needs. Contact us today to learn more about our services and to schedule a consultation.