Buying real estate Focus on these 3 numbers

Buying real estate Focus on these 3 numbers Buying real estate Focus on these 3 numbers A  first home buyer  might be surprised to know how much stress goes into the process.Buying real estate will likely be the most daunting and expensive purchase of your adult life.Follow Ladders on Flipboard!Follow Ladders’ magazines on Flipboard covering Happiness, Productivity, Job Satisfaction, Neuroscience, and more!To make matters more complicated, cities like Washington, DC have one of the most expensive housing markets in the country. So until you actually go through the process, first home buyers can easily get in over their heads with seemingly great mortgage deals.That’s why before you start house hunting, you should think about the avenues available to purchase your first home  responsibly.It’s critical that first-time homeowners “understand what you can afford,” says  Landsdowne Development Group    Director of Operations and Finance Michael Cardman.  â€œYou can do that by doing your own calculations and being honest with yourself.”Median Home PricesThe median price of homes currently listed in the District is approximately $528,000. That’s more than double the national average - approximately $208,000- according to online real estate database Zillow Group.And while Washingtonians do have a higher median household income than the average American - approximately $73,000 versus $57,000, according to the latest Census Bureau statistics - the bump in salary is not enough to compensate for the drastically higher home prices.If you’re dead set on buying your first home, you’ll need to carefully  evaluate your assets, liabilities, cash flow, and monthly living expenses to figure out what kind of house you can realistically afford.What You Can Actually AffordCardman also cautions first-time homeowners to take a bank’s evaluations of your finances with a grain of salt. “They ’re going to say ‘Cool! Based on your income and your assets you can afford X.’ Well yeah, maybe you can afford X, but you’re never eating out again. Y ou can’t go do anything with your friends, and you can’t buy furniture for the home you just bought,” he says.Someone renting at $1400 might think a $1700 mortgage at their current salary won’t be too much of a stretch.But you’ll also want to be aware of the additional expenses that come with owning a home, says  Enterprise Homes  Development Director Louis Kiang.“It’s kind of all of these ancillary costs - which aren’t necessarily extravagances - that you don’t think about,” says Kiang.“The standard ones are easy. You got utilities, you got taxes, you got insurance. But what about furniture? What about routine maintenance and upkeep, lawn services? All that stuff that the bank won’t consider,” he continues.To prepare Kiang suggests you “think about what your lifestyle is like before the purchase and what it’s like after the purchase.”“Practice what it would be like to own a home. Write yourself a check to a savings account, to your parents, to yo ur siblings. Actually get the money out of your account like you’re about to have mortgage. And after doing that, evaluate whether you can still support your current lifestyle,” says Cardman.Your Credit ScoreAnd what about  building good credit?  Kiang stresses that first-time homeowners “can’t start soon enough.”“You can’t run up high credit card balances and then all of the sudden decide ‘You know, I’m gonna buy a house in a year, so I’ll stop spending now.’ Even if you pay it all down, that’s still on the records and you’re going to generate questions with the bank,” he says.If you’re not confident in your credit score, Kiang tells us that there are ways to fix it. He suggests opening another credit card, charge nothing or an extremely small amount on it, and make all of your payments on time.“You want as much credit as possible, you just don’t want to use any of it,” he says.Both Cardman and Kiang also suggest that homeowners set up an emergen cy fund to cover housing expenses. They advise having at least 3 months’ worth of your mortgage payments stashed away at all times. If possible, Cardman suggests having a fund with as much as nine months’ worth of mortgage payments.Getting StartedFinding a good agent is an important part of a successful home buying process. When it comes to choosing the right one, prominent  Weichert real estate agent Cesar Milla  tells clients to “trust your gut.”“You’re entrusting someone to search for a home you’re going to live in an average of 7 years of your life,” says Milla. “That’s a big commitment. Ask your potential realtor questions like ‘how long have you been in the business?’ and ‘how often do you like to communicate with your clients?’“Likewise, they should have questions for you. Like ‘what is your objective’ and ‘how much do you want to spend?’ You’re building a working relationship so it’s important to know what the expectations are.”Thi s article first appeared on Capitol Standard.  You might also enjoy… New neuroscience reveals 4 rituals that will make you happy Strangers know your social class in the first seven words you say, study finds 10 lessons from Benjamin Franklin’s daily schedule that will double your productivity The worst mistakes you can make in an interview, according to 12 CEOs 10 habits of mentally strong people