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Local KeyBank manager on what to consider before buying a house

Your house is your shelter, but it is also likely the largest investment you will ever make.

So not only do you need to make sure you are really ready to take the plunge, but it is also important to know how you can best maximize the value of your purchase. That means doing some homework before you sign on the dotted line.

Think about your long-term plans. According to Kiplinger.com, you need to stay in your home five to seven years to make the purchase worth your while. The reason: in most markets, home values increase only marginally year-over-year. Even in a recovering market the transactional cost of buying and selling will likely offset your gains.

Get Pre-Approved. Once you have decided to purchase a new home, the next step is to work with a reputable lender to determine how much house you can afford. Taking this important step will help you focus your search on homes in your price range and minimize surprises when it is time to complete your financing. Even if you have limited resources for a down payment or a minimal credit history, don't let that stop you from getting pre-approved. Loan programs for people in these situations exist to help get you into a new home that you can call your own.  

Look for ways to boost your credit score. Ideally, you want to review and start working on cleaning up your credit report months before you start the loan application process. Make sure the details are accurate. If they are not, have them corrected. If your credit score is not as high as you would like, talk with your banker to see how you might be able to strengthen it before applying for your mortgage. You can view your credit report for free at annualcreditreport.com.

Calculate how much house you can afford. The cost of owning a house is more than your monthly mortgage payment. You need to account for taxes, debts, and other expenses, as well as maintenance fees. To get a better sense of how much house you can really afford, use one of many calculators available online.

Value location. Location is still one of the most critical factors in making a home-buying decision. Research the schools, crime rates and quality of municipal services. First, buying in the right location can improve your quality of life. Second, homes in great communities with reputable schools generally increase in value and will be easier to sell further down the road.

Work with a professional.  With the internet, you can conduct your house hunt from the comfort of your living room couch. However, there are still many details you will likely overlook if you try to represent yourself during the buying process. In addition, an experienced agent will know the nuances and history of the market better than you, which will help you secure the best possible price on your new house during negotiations.

Hire a home inspector. A home inspection and an appraisal are two very different things. The appraisal is the bank’s method for determining the value of the house you are buying. An inspection will identify problems that need to be addressed at an additional expense. In some instances, you may be able to renegotiate the terms of the contract if costly repairs are required.

Our mortgage specialist can help you figure out how much house you can afford. Come by or call the branch for complimentary assistance.

Holly West manages the Issaquah North Key Center in Issaquah, Wa. She can be reached at 425-313-3606  or holly_k_west@keybank.com.

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