Owning a home is likely the most important financial goal most people have. But when it comes to buying a home, you want to get value for your money. And that often comes down to location. There are plenty of advantages to be derived from buying a property in an upscale area. However, that is only possible if you are going to do it right.
Here are five useful tips on buying a property in an upscale area.
1. Make Sure You Are Ready
A home is the single largest investment the average person will make in their lifetime. While buying property is a desirable aspiration, make sure it is the right decision for you at that point in time. That is especially so if you are buying a New Construction Home financed by a mortgage.
Depending on your circumstances and financial position, it may be prudent to continue renting your home for a while to save money. Property is not only an illiquid asset but is also one you have to evaluate with a long-term view. Investing in an upscale home in a hurry could see you grappling with the dire consequences for years if you cannot afford it in the future. So proceed only when you are ready.
2. Use Your Current Rent as a Gauge
If you are contemplating buying property in an upscale area, then the chances are that you have an income that allows you to currently rent in an upscale neighborhood. Therefore, the rent you pay should be a good starting point on how much you can afford to pay for a mortgage. In any case, your current rent is likely already paying for your landlord’s a mortgage and property taxes.
You can use a mortgage calculator to determine what you can afford. Make sure your calculations take into consideration the mortgage term, mortgage interest rate, mortgage insurance, and real estate taxes.
3. Do Not Become Fixated on One Home or Neighborhood
There is no denying the emotional connection that comes with shopping for and buying real estate. Once you develop a fondness for a particular neighborhood or spot a specific home you are interested in, it can be hard to look elsewhere. Yet, the more areas you look at, the more opportunities you are bound to run into. That may be what leads you to a better home in a better neighborhood – at a better price.
Ideally, you should search for a home in at least three neighborhoods before you settle on one. Even if you still come back to your original choice, you will at least rest in the knowledge that it was indeed the best.
4. Start Saving Early for a Down Payment
Irrespective of where you are buying property, saving early for the down payment is vital. However, it takes on even greater significance when you are targeting a home in an upscale area. The buying price will be significantly higher than that of the average home, so the down payment will be higher. The earlier you can start saving, the better.
Ideally, start saving as early as three years before the purchase. Downsize your spending as much as possible, so you are well prepared for the down payment and closing costs. If need be, move to a smaller apartment. It is a worthwhile temporary sacrifice to getting your dream home.
5. Maximize Your Credit Score
The better your credit score, the more attractive the mortgage interest rate a lender will offer you. Also, individuals with better scores could qualify for a lower down payment.
It is never too late to work on your credit score, though there are certainly advantages of beginning earlier. Ideally, you should begin addressing your score at least five years before you buy the home.
Make an Informed Decision
The area you buy your home will affect not just your finances but also your household’s quality of life. Purchasing property in an upscale area has numerous long term benefits, but only if it is done thoughtfully with planning and much consideration.