BETHESDA, Maryland. For most, the purchase of a first house or the purchase of real estate will be either the biggest, or one of the biggest purchases a person will make in a lifetime. It is important to be prepared both financially and legally before you make a purchase. This means having your finances in order, your down payment saved, and, for many, a real estate lawyer like the Law Offices of Michael E. Gross in Bethesda, Maryland on your side. Here are 5 things to consider before purchasing real estate:
- Consider your savings before making a purchase. According to Forbes, some home buyers put their down-payment savings and emergency fund savings in the same bank account. This can create confusion when the time comes to make a down payment on a home. In general, most families should have the equivalent of 6 months of living expenses saved for emergencies. If buying a home will tap into this savings, it may be wise to wait a little longer. Additionally, some individuals purchase a home that isn’t within their means, choosing a more expensive home at the cost of retirement funds. Make sure you can afford the home you choose, and double check that paying a down payment won’t decimate your savings.
- Consider taxes. The cost of a home isn’t just the mortgage payment. You’ll also have to consider what you’ll owe on taxes for any real estate you purchase. This is especially important if you plan to make a real estate purchase for investment reasons.
- Consider how long you’ll live in the home. If you are buying real estate or a home for investment reasons, you may want to think about how long you can commit to staying in the home. Generally, individuals shouldn’t consider buying unless they plan to reside in a home for another 5 to 7 years. The costs of selling and closing can add up.
- Consider your loan options. Your loan options will depend on your credit history. Once you know your interest rate, consider the cost of the loan over the lifetime of your mortgage. According to Business Insider, lenders will consider pay stubs, employment, tax returns, and your credit score. In some cases, when you consider the costs of owning a home (maintenance fees, insurance, closing costs), it may make more sense to keep renting.
- Read through the purchase contract. Buying real estate is a serious commitment. Make sure you carefully read the contract before you buy. Contracts can be complicated and confusing for individuals not trained in law. For this reason many individuals choose to seek the advice of a real estate lawyer before signing on the dotted line. The Law Offices of Michael E. Gross are real estate lawyers in Bethesda, Maryland who can assist you as you navigate the complexities of real estate contracts.
Buying real estate can be an exciting process, especially for first-time buyers, but there are many pitfalls that you’ll need to navigate as you go along. Understanding the process and having a firm grasp of your real estate contract is essential.