In the market for a new home but have no idea where to start? There are several decisions you should begin to make before you even start your home search. After considering all these factors, you'll be ready to start the home search with a clearer picture of where you're headed.

1. What's your budget? See how your finances stand up to the 28/36 rule, which lenders use to see what you can afford to pay each month. The "28" refers to the percentage of your gross monthly household income that should be allocated for housing costs each month, including principal, interest, taxes and insurance. The "36" represents the total debt that you carry. It shouldn't exceed 36 percent of your total income. A financial adviser or your real estate agent also can help you crunch the numbers. Going through the mortgage pre-approval process lets you know how much lenders will allow you to borrow – plus it helps you show that you have the funds to back up your offer.

2. What do you need in your new home? How many bedrooms or bathrooms do you need? What about a large kitchen, a home office or a playroom for the kids? How many cars need covered parking? It's very important to ensure the home you select meets your family and lifestyle needs.

3. Do you want a condo or single-family home? Condos come with much less maintenance. You typically won't be shoveling snow in the winter or replacing the roof, but you'll likely pay monthly association fees to cover services and repairs in the community. Houses, on the other hand, come with more privacy and freedom to customize. They also come with full responsibility for maintenance.

4. How do you feel about living under covenants? Depending on where you buy, you may have to pay homeowner association (HOA) fees in addition to your mortgage. There are benefits to HOAs, such as maintenance, community centers, and maybe even a pool or gym. But you also could be faced with more restrictive rules about the look of the outside of your home, down to the color of your front door, types of window coverings, and whether you can plant flowers in your yard.

5. What school district do you want to be near? Even if you don't have children in the house, local schools will affect your property value. Prospective home buyers tend to search with education in mind. Do your research on the schools in the areas you'd like to live in.

6. Should the home be move-in ready? Ask yourself how much elbow grease you're willing to put into a home – or how much you'll pay someone else to do the work. Fixer-upper homes can be great after the work is done, but you'll want to figure out your renovation budget before you start your home search. A 203k home-renovation loan might be the right resource for you. If you're not ready for the extra financial commitment of rehabbing a home, or you can't or don't want to wait for remodeling projects to finish up, then a home that's move-in ready might be right for you.

Posted by Earl Sanders on

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