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Created: Jan 11, 2018
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Location: beijing , Andorra
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buzai232 OFFLINE
The Start-to-Finish Guide to Buying a Home


buying homes is a major milestone that tops many people's lifetime to-do lists—and maybe their list of financial fears too. But it certainly doesn't have to be a scary or stressful experience. With time, care, and research, you can take control of the home-buying process.

Because while house hunting for the first time can be exciting, tales of regretful home-buying mistakes and the not-so-distant housing market meltdown have also given it a bad rap for being a stressful and confusing process. It doesn't have to be—that's why we created this handy nine-step checklist, which helps explain how to prepare to buy a house—and help safeguard your finances in the process. Well, there are no surprises here: Your first step in the home-buying process is to determine your budget, just as you'd likely do for any other major financial decision.

"As a general rule of thumb, you should be looking at home prices that are two to three times your annual income," says Tom Gilmour, a CFP® at LearnVest Planning Services. "This helps ensure that you're not taking on a larger mortgage commitment than you can afford." Speaking of mortgages, Gilmour recommends that payments generally not exceed 28% of your monthly gross income—but if you have other high costs, such as private school tuition, it can be wise to pare down this percentage even more. If you're not sure what's realistic, consider seeking help from a financial professional, who can help walk you through an appropriate breakdown, based on your individual situation.

Once you've defined your budget, it's time to look at your cash reserves. Gilmour suggests saving up a minimum of 20% for your down payment in order to avoid having to buy private mortgage insurance, plus another 3% for closing costs. (More on that later.) You'll also want to make sure you have enough savings left over to help pay for any home improvements, decorations or miscellaneous moving and maintenance costs that may pop up—in full. Translation: You should not be using your emergency fund to cover these costs.

"Being a homeowner often comes with surprises, like a burst pipe in the middle of the night that needs to be fixed right away," Gilmour says. "So you need to be financially ready for these surprises, which means you shouldn't deplete your emergency fund for expenses like furniture or remodeling."





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