1. How long do I plan to live in this house?
Knowing this can help you plan what the next few years will look like. If you are not planning to spend a long time in a house, you might be able to spend less money in order to be ready for your next move. This will also help you to determine what expectations you will have when house hunting. If you are not yet looking for that “forever home” you might be able to make some trade-offs with items you had on your must have list. Don’t worry too much yet about having all that you want in a dream home.
2. Where do I see myself in five or ten years?
This again goes back to planning. If you know that in five or ten years you will be starting a family, you may want to look for a home with space to grow into. This can mean looking for a yard for kids to play in or extra bedrooms. Financially speaking, it can be harder to make a plan on where you will be. However, if you know you will be changing jobs or possibly relocating you need to consider this when deciding on a home and how much you want to spend on it.
3. Do I have to or want to make home improvements?
Many people look for homes that need some renovations for various reasons. One of those reasons is saving some money. Homes that are outdated or need major functional repairs will sell for less than homes that are move in ready. Buying a fixer-upper also gives you the opportunity to customize your home to have the look you want or add any technological updates you may be interested in. These changes tend to be easier in a home that may already need to be gutted and fixed up. For others, home renovations are not a thing to consider. Many homebuyers will want a house that is move in ready so they do not have to spend too much time on renovations and can enjoy their new home sooner.
4. Do I want to keep cash on hand for other investments?
When purchasing a home, buyers will typically need to place a down payment which can be a large amount of money. For many people, this will be most or all of their savings. One thing to consider is whether buyers are ready to give up that money or if they prefer to save some of it for other investments that will benefit them in the future and perhaps lead a cash inflow. This decision will have an impact on what loan option buyers will be choosing. There are some options that allow borrowers to place less than the typical 20% of purchase price. These options are something to discuss with your mortgage broker, and something I’m happy to help with.
5. How quickly do I want to be debt-free?
This is another financial decision that needs to be considered before starting to look at homes, so buyers can have a realistic idea of how much they want to spend. This also comes back to the question of planning for the future. If you know that in the near future you may have other expenses such as sending kids to college or other large life expenses you may want to pay off your mortgage quickly. Discussing various loan options with your lender will help determine what is the best course of action for paying off your mortgage in the time frame that is ideal for you and your family.