Buying a Home This Summer? Here Are 3 Things to Consider

budget homeownership

As temperatures heat up this summer, millions of folks will be attempting to buy houses. If you’re one of them, you should keep a few things in mind. Of course, while summer is usually the housing market's hottest season (figuratively and literally), these principles remain true no matter what season you purchase a house.

1. Buy a house that will be a financial blessing, not a curse. 

The big question facing most would-be homeowners these days is, “How much house can we afford?” As home prices have risen in recent years, this question requires tougher answers. However, it’s critical that your home purchase fits within your budget – both in terms of a manageable monthly payment and a total purchase price that will allow you to pay it off in a reasonable amount of time.

According to wealth researcher Dr. Thomas Stanley, the typical self-made millionaire in America spent less than three times their annual household income on their most recent home purchase. This is one of the keys that allowed them to build wealth. Of course, to qualify for most home loans, you will need to put down a sizable down payment. Even though some lending institutions will let you get away with less, a large down payment puts a strong buffer of equity between your finances and potential disaster. Even if the housing market falters and you need to sell your house, you will still have enough equity to get out. A strong down payment also prevents you from becoming upside down or underwater and keeps you in control.

Buying a house with a strong down payment at a price that provides a manageable monthly payment helps ensure that this purchase enhances your life overall.

2. Buy a house that will appreciate in value and that you’ll appreciate living in.

Make certain you find a house that will continue to be a blessing as you own it. The old adage in real estate is that the three most important factors are always location, location, and location. This is intended as a dramatic overstatement, but there’s more truth here than you might think. Buying in the right location will help ensure your house remains a blessing.

You’ll want to ensure you are buying in an area that isn’t experiencing a decline. Have your real estate agent pull information about recent sales for the town and neighborhoods you’re searching in. You should find that home prices have been and are continuing to rise. If recent history indicates a decline in values, that’s not a good sign for the future.

Additionally, it’s best to purchase homes in the low to middle price range of the neighborhood. You never want to be the most expensive house around. Houses at the top of the neighborhood will appreciate more slowly than those at the bottom and middle.

Finally, purchase a home in an area that suits your lifestyle. The neighborhood will influence your spending and lifestyle. So, buy in an area that will not cause you to spend more than necessary.

3. Buy a structurally sound house.

 Even an attractive house in a great neighborhood can still have hidden flaws. For this reason, you will want to have your prospective home thoroughly inspected before you close on the purchase. A general home inspection can uncover structural issues or major concerns about the foundation, roof, heating and air systems, or appliances. Paying a qualified inspector to assess these is well worth the expense.

In most parts of the country, insects such as termites can do massive, unseen damage to homes. Having a qualified pest inspector assess the home for the presence of insects or the damage they can cause is an absolute must.

Radon is a cancer-causing gas present in many homes across the country. Most homeowners are unaware of its existence because it is odorless and tasteless. Fortunately, radon can be tested for and mitigated. To protect the health of your family and the value of your home it’s a good idea to have your home tested for radon before closing as well.

Buying a home can be both exciting and scary. In the long run, the house you buy can be a tremendous blessing or a devastating curse. However, if you stay disciplined with your purchase, careful in your selection, and thorough in your due diligence, you can make this purchase one of the most rewarding for your finances and your family.

About the author: Jordan Hall is a (reformed) attorney, real estate broker, and entrepreneur. He wrote the book, Every Degree Debt Free, about his experiences paying for law school without loans. Today, he no longer practices law but helps folks build wealth so that they can live their purpose and leave a legacy. He is also a French fry connoisseur.