How To Own Your Dream Home

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How To Own Your Dream Home | Downers Grove Real Estate Agent

You start dreaming of how wonderful it would be to own a home and start looking around the internet at homes.dreamhome downers grove real estate agent

It’s an admirable goal with lots of great benefits; building equity, improving your credit score, potential income down the road, but first and foremost it’s a place that you can call your own and build precious memories with your family.

“The distance between your dream home and owning a home is called action”

Dreaming about owning a home is the first and most important step, but buying your first home can be one of the most exhilarating and stressful moments of your life.

Armed with the right information, you can shop for a house, apply for a mortgage, and close the deal with confidence.

Here are 5 tips towards owning your dream home.

  1. How Much House Can You Afford?

    I know it’s a touchy subject, but it’s an important one. If you stretch your budget to buy your primary residence that you can barely make payments on, it becomes a liability.

    You should want to buy a home, because you want a home, not as an investment.  Only buy a house that you can afford today!

    As a rule of thumb try to keep your housing expenses (Mortgage, Interest, Property Taxes and Home owners insurance) at about 30% of your income, if you spend much more than that you risk the chance of finding it difficult to cover your monthly expenses.

  2. Tap your primary home
    Consider using your equity for a down payment. Or, if you plan to retire in the vacation home in a few years, minimize your payments with an interest-only second mortgage, says Tucker Watkins, a financial planner based in Irvine, Calif.

    Then when you sell your primary home, you can exclude up to $500,000 in capital gains from your taxes and use your profit to pay off or reduce the mortgage on the second home.

    Your total housing payments should not exceed 28% of your gross income.

  3. Buy a house below market value

    A $200,000 house may not be your dream house in many markets that may not get you a starter home.  Most people will not be able to buy their dream house when they buy their first house.  It will take time and hard work to build yourself into a position to buy your dream home.  One way to buy your dream home is to make more money, but this article will focus on doing it strictly with real estate.  One reason I love real estate so much is that you can buy houses below market value.  With the stock market and most products you buy them at market value.  Houses can be bought below market value because they are not easy to value, they may need work or the seller may need to sell the house quickly.  I buy all of my houses below market value and that is how I am able to make so much money on my rentals and fix and flips.

    If I was in the market for a $200,000 home that would be my personal residence, I would want to buy that house for at least 20 percent below market value.  If it was a fix and flip I would want to buy it for even more below market.  I would buy the home for $160,000 assuming it needed no repairs and if it needed work I would want to buy it even cheaper.

  4. Older vs New Construction

    According to a recent Trulia trends report, twice as many people prefer new homes over existing homes.“New” means new construction, or homes purchased in pre-construction while “existing” means a house someone else has lived in. In many parts of the country, especially the East, Northeast and South, many of these “existing” homes are homes built anywhere from the 1920s – 1970s. For the same price, 2 in 5 of Americans (41%) strongly prefer to buy a newly-built home over an existing home. However, most new construction homes could cost you up to 20% more than a comparable older house. Buying an older home could add up to big savings and allow you to get a bigger piece of the “dream” than a brand new one.

  5. Knowing The Must-Haves vs. Should-Haves

    What makes something about a house a “must-have” and another element a “should-have?” Well, the must-have is essential in your new home. For example: “We now have a newborn baby, so we must have a two-bedroom house.” However, a should-have is not essential and it may get nixed out of the mix if price becomes an issue. For example: “We should have a three-bedroom house. That way we can save one room for guests or for a home office.” That third bedroom is not a must-have and you could or may have to live without it to get into a house you can afford. Square footage is also a must-have. For a first-time home buyer, 1,600 square feet could be a realistic minimum must-have, whereas 2,300 square feet is a should-have. A nice, clean, functional kitchen is a must-have, but a gourmet kitchen with double ovens and Viking stainless steel appliances is sadly just a should-have.

    Knowing your dream house must-haves vs. should-haves really helps you prioritize, because on the ultimate hunt for your dream home — compromises are going to have to be made.

    Happy hunting!

Downers Gorve Illinois real estate agent Beata Kolpek is your #1 choice for the best Realtor in and around Downers Grove.

Downers Grove Real Estate Agent

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