Purchasing a new house is not as simple as buying new clothes from the store. It is a huge investment that requires much more than just planning and budgeting. It is always recommended to consult an expert mortgage professional or a financial advisor who can prepare you for making the big purchase. Even if hiring a professional may seem like an added and unnecessary expense, it pays off when you are making a big decision, such as buying a new property.
When you decide to buy a new house, here are 5 financial questions that you should ask.
1. What is a good budget:
Budgeting for a new house may seem overwhelming, but a financial advisor can help you understand all the factors that you should consider when setting your budget. This will prevent you from making the rookie mistake of not considering any costs that you may incur apart from the house price. When you set your budget, you should factor in the additional costs like property taxes, insurance, and additional expenses associated with maintaining the house. It is strongly suggested to first set your budget before you start looking at various property options. If you have not calculated your budget correctly, it will only delay the process of buying a house, or you may have to compromise on certain aspects related to the house.
2. Do I need a depreciation schedule:
In many cases, a depreciation schedule can reduce your financial burden. However, it is important to understand the value of your depreciation schedule and what are its impacts on taxes. An accountant can help you analyze the factors if you are debating between purchasing a new property with a high depreciation allowance or an old home that you can later renovate.
3. Is it better to buy an old property or a new one:
Both new and old homes have their share of pros and cons. Even if one seems cheaper as compared to the other, it is best to consider the trade-off before you make your decision. An old property’s value assets depreciate over time due to its wear and tear. But a new home may be out of your budget. Although there is no correct answer for which home to buy, an accountant can help you in evaluating all your options and making an informed decision.
4. What is the difference between repair and renovation:
Most people interchangeably use the terms repair and renovation. However, in the world of real estate, they have separate meanings. For example, if you are replacing your broken windows with new ones, it would classify as renovation. On the other hand, if you are just setting electrical connections, or fixing cracks, it will be considered a repair. There are different permits and expenses associated with repairs and renovation that can impact the overall value of your house.
5. What is the best type of ownership:
In addition to the parameters mentioned above, you should also decide whose name will be listed on the property registration. If any unforeseen problems come up in the future, there could be a dispute on the ownership of the house. You can decide to register the property in your own name, a company’s name, or a joint name with your spouse or family. The type of ownership impacts tax planning, and it is best to consider it beforehand to get the best tax benefits in the future.
How can a good mortgage professional assist you in your house purchase:
As discussed earlier, it is a big decision to purchase a new home. One needs to plan the entire budget well in advance and take all the factors into consideration before selecting a property. This makes it imperative to seek help from a good mortgage professional who has a sound understanding of all the steps involved in purchasing a new house. A seasoned professional can provide their expertise to help you select from all the available options. Hence, if you are considering buying a new home, don’t get carried away by the process, but instead, consult an expert who can make the entire purchase process hassle-free and help you make informed decisions to avoid homebuyer’s remorse in the future.
For more information from mortgage experts Rex Homes on these questions, visit their blog here: https://blog.rexhomes.com/5-financial-questions-to-ask-before-buying-a-home/
