Buying real estate Focus on these 3 numbers

Buying real estate Focus on these 3 numbersBuying real estate Focus on these 3 numbersAfirst home buyermight 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 FlipboardFollow Ladders magazines on Flipboard covering Happiness, Productivity, Job Satisfaction, Neuroscience, and moreTo 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.Thats why before you start house hunting, you should think about the avenues available to purchase your first homeresponsibly.Its critical that first-time homeowners understand what you can afford, saysLandsdowne Development GroupDirector of Operations and Finance Michael Cardman.You 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. Thats 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 youre dead tischset on buying your first home, youll need to carefullyevaluate 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 banks 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 youre n ever eating out again. You cant go do anything with your friends, and you cant buy furniture for the home you just bought, he says.Someone renting at $1400 might think a $1700 mortgage at their current salary wont be too much of a stretch.But youll also want to be aware of the additional expenses that come with owning a home, saysEnterprise HomesDevelopment Director Louis Kiang.Its kind of all of these ancillary costs - which arent necessarily extravagances - that you dont 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 wont consider, he continues.To prepare Kiang suggests you think about what your lifestyle is like before the purchase and what its 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 your siblings. Actually get the m oney out of your account like youre about to have mortgage. And after doing that, evaluate whether you can still support your current lifestyle, says Cardman.Your Credit ScoreAnd what aboutbuilding good credit?Kiang stresses that first-time homeowners cant start soon enough.You cant run up high credit card balances and then all of the sudden decide You know, Im gonna buy a house in a year, so Ill stop spending now. Even if you pay it all down, thats still on the records and youre going to generate questions with the bank, he says.If youre 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 dont want to use any of it, he says.Both Cardman and Kiang also suggest that homeowners set up an emergency fund to cover housing expenses. They advise having at least 3 months worth of your mor tgage 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, von rangWeichert real estate agent Cesar Millatells clients to trust your gut.Youre entrusting someone to search for a home youre going to live in an average of 7 years of your life, says Milla. Thats 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? Youre building a working relationship so its important to know what the expectations are.This article first appeared on Capitol Standard.You might also enjoyNew neuroscience reveals 4 rituals that will make you happyStrangers know your social class in the first seven words you say, study finds10 lessons from Benjamin Franklins daily schedule that will double your productivityThe worst mistakes you can make in an interview, according to 12 CEOs10 habits of mentally strong people