4 Factors to Consider When Buying a New Home

Buying a home is one of the biggest, most expensive decisions you will make. Where you live impacts your entire life, so it's important to make the right choice.

Whether you want to live in a tiny house or become a proud owner of a mansion, here are four factors you need to consider when buying a new home.

Location

Location is a very important thing to consider when you are looking at homes for sale, and the location you should choose depends on your needs and priorities. Maybe you care about living in a safe neighborhood, or you hope to live close to work. 

If you have children, you can look for houses in well-rated school districts. Choosing a home in the right location will set you and your family up for long-term success.

Size

Your budget will have the biggest impact on the home you purchase. Buying a home starts with securing financing through a mortgage lender. They will look at your financial picture to determine how much they can reasonably let you borrow. 

However, just because you get approved for a certain amount doesn't mean you have to take it all. It's okay to take out a smaller mortgage so you have more flexibility in your budget.

Remodeling

Most homes will need some remodeling work, which will need to be included in your budget. Whether patching up the drywall or installing a new bathroom floor, you may need to make minor repairs to make your home safe and comfortable to live in. 

At the very least, you will probably want to paint the walls to make your home suit your style. You should be realistic about how much money and time you will put into fixing a home before buying it.

Cost

Your monthly mortgage payment isn't the only cost of owning a home. You also must consider how your home's location, size, and structure will impact your energy bill, property taxes, and insurance premiums. 

You will also need to budget for repairs when something inevitably breaks or wears out. Another cost to consider is if your property has HOA fees. These monthly costs can range from $400 to over $1,000 a month!

No matter what your financial picture, wants, and lifestyle needs look like, it's important to take your time when shopping for a home. You can keep these four factors in mind while shopping so you can purchase the home that's best for you.

How You Can Buy a House Without Thousands in Your Savings Account

You may think that it isn’t possible to get a mortgage without a large down payment. The truth is that you may be able to get a mortgage with no down payment at all depending on what type of loan product you use. Let’s look at how you can become a homeowner even if you don’t have a lot of cash in the bank.

Look for Loans Insured By the Government

The Federal Housing Administration (FHA) offers loans with a down payment of 3.5%, and the down payment can be gifted by a friend, parent or colleague. Those who are willing to live in a suburban or rural area may be eligible for a USDA loan that comes with no down payment requirement. 

It is worth noting that you will need to pay private mortgage insurance if you make a down payment of less than 20%.

Do You Have Good Credit?

Lenders that offer conventional mortgage services may allow you to make a smaller down payment without having to pay private mortgage insurance. This is generally true if you have a credit score of at least 700 and a steady income. 





If you have a credit score between 640 and 699, it may be possible to be approved for a loan with a down payment of less than 20% if you have significant assets.

Seek a Down Payment Loan

Lenders may allow you to take out what is referred to as a piggyback loan. In such a scenario, you would take out one loan that covers the cost of the home. You would then take out another loan that would cover the cost of the down payment. 

The two loans are repaid simultaneously over the course of several years, and interest rates on piggyback loans are generally the same as interest rates on conventional home loans.

If you find yourself in a better financial situation at some point after closing on the property, you can refinance those loans into one traditional mortgage. In the meantime, you can accrue equity in your home that can be used as collateral for a future loan or other provide financial flexibility.

Buying a home can be a significant milestone in your life. It can provide you with a sense of stability that may be difficult to achieve when renting a home or apartment. If your mortgage comes with a fixed-rate, you will know exactly how much your housing payment is for next 10 to 30 years.