For sure, after spending a few years renting a house, you will realize you need to stop splurging money on monthly rent payments, and purchase an apartment, instead. The process of apartment searching can be very difficult.
However, a little research can undoubtedly go a long way towards making a well-informed decision. If it’s your first time buying an apartment unit, keep in mind that there are things that you need to know before you seal the deal.
For a little help, here are some pointers to consider before purchasing an apartment.
Buy Vs. Rent Decision
Maybe the major factor in deciding whether to buy or rent is the period you foresee to stay in your apartment. Usually, if you do not expect to live in your new apartment for about five years, then renting is most probably the best move you can do.
However, if you plan to live there for more years, know how much you can be paying to own an apartment versus how much you’re actually paying to rent. Moreover, a home loan payment will often be less compared to rent, presuming that the place you plan to purchase is quite similar to the one you are renting.
It is because the owner of the place you are renting is paying the same as you would for repairs, homeowners association fees, taxes, interest, principal, and a little bit of profit. Even so, there is much more to owning an apartment than renting.
To purchase and own something, you need to have enough money than you’d need for a lease. And the biggest hindrance is the down payment or deposit. The amount needed for the down payment relies upon the kind of mortgage you obtain and possible even where the apartment is situated.
Government-supported home loans entail low down payment of at least 3.5 percent of the buying price. Also, veterans can get a zero down payment mortgage via the Department of Veterans Affairs. For traditional loans not supported by the government, expect to put a 20 percent down payment.
Another thing, you will need money for closing costs to pay for the title insurance, home inspection, appraisal, survey, and other costs.
Figure Out What You Can Afford
If you type “Apartments for sale” in the search engine bar, you’ll see lots of results right away. Some can be affordable, but most of them are expensive. That said, it is wise to figure out what you can afford first before looking through pages of options.
You can begin by knowing your debt to income ratio. Just simply get the sum of your monthly loan payments and then divide it to your income per month. For example, if you have a total of $3000 monthly debt payments and your monthly income is $6000, your DTI is 0.5 or 50%.
Take note that creditors use your DTI to know how much monthly payment you can manage to make. Lenders typically want a DTI of at least 43%. So, if your DTI is more than that mark, it might be hard for you to be eligible for a home loan.
Fortunately, there are ways you can do to improve your DTI. You can do this by opting for a lower mortgage payment plant, which means purchasing an inexpensive apartment.
When looking for an apartment, it’s important to consider its location. You want an apartment that’s close to many amenities like hospitals, malls, parks, and more. Ask the following questions to a real estate agent (if you have one):
- Is the parking lot accessible?
- Is the apartment building a four-story walk-up block?
- Which direction does the apartment face?
- Is it near the garage doors or elevator?
Although these questions are not negative ones, they should be deemed part of the overall offering and proposition for the buying price.
Hire An Expert
Apartment buyers could make the process of apartment hunting much easier with the help of a licensed realtor. A real estate agent can help you out with questions about communities, fees, taxes, and pricing.
Also, a realtor can give your helpful advice and recommendations into how to bargain or deal with sellers. What’s more, you can opt to hire a financial advisor, too, as they often work with realtors to make sure that you’re making the right decisions.
You can surely make your dream of owning a home into reality by purchasing an apartment. Owning one rather than renting can be beneficial to both your finances and lifestyle. But before you decide to buy a particular unit, know that there are many things to consider.
You need to understand the pointers outlined in this article as they can help you navigate your homeownership journey. Don’t forget to get more help as much as possible to make well-informed decisions that are aligned with your financial goals.