THINGS TO KNOW BEFORE BUYING HOUSE
Unless you are building your own home, it's unlikely you'll be able to make every dream on your home “wish list” come true. You will have to prioritize the things you need in your home versus what you want. That looks different for every homeowner. For example, if you work from home, you will want a home that has a home office. If you have kids and they don’t want to share a bedroom, you’ll want to buy a place that has a room for everyone.
While you’re thinking of what you want and need in your home, you should consider what other individuals would want and need in a home. If you’ll be selling this house at any point in the future, you’ll want to take the resale value of any potential home into consideration. Make sure you think of all the possible factors that impact resale value, however. Sometimes, you might not pay attention to a factor because it doesn’t impact you directly. For example, if you don’t have children, you may not think about the school district in which a home is located. However, families who may move into your home will want to live in school boundaries that are highly ranked and rated. In fact, Trulia reports that 4% of homeowners regret not buying a home with a better school nearby. It may be worth it to add factors like this to your wants list now so improve your resale value later.
While you consider what you want and need in a home, it’s also a good idea to think about it in terms of things you can easily change. 34% of homeowners with regrets about their homes said they regretted not purchasing a larger home. You won’t be able to increase the amount of square footage in your home once you purchase (without a major remodel), nor can you change where your home is located — 8% of buyers regretted choosing a home with a long commute. If one home you’re considering meets all your requirements but doesn’t have a great kitchen but you like the kitchen layout in another despite it missing some other requirements, go with the first one! It’s much easier to remodel a kitchen!
Buy a Home You Can Afford
A home isn’t just a way to switch out your rent for a mortgage. A home is a huge commitment, and if the timing isn’t right, it can be a huge mistake! Before you begin searching for a home, get pre-approved for a mortgage. If your credit score and debts aren’t ideal, you may want to consider paying off some of your debt, improving your credit score, and saving more money before you purchase a home.
When you get pre-approved for a mortgage, it’s important to know that that isn’t necessarily the price of the house you should be looking to purchase. Often, pre-approval rates are much higher than what you can actually afford, so make sure to look at your budget and figure out how much you can spend a month, so you can look at the right price range of houses.
It’s also important to remember that home ownership isn’t just a monthly mortgage payment. Your monthly payment is divided up between 3-4 things, depending on the mortgage you get for your new home. Part of it is paying off the principle of the home (the money you borrowed) and the interest (a percentage of the money you borrowed as a fee you owe the lender for borrowing the money). The rest includes paying the property taxes of the home each year and, if your down payment was less than 20% of the home’s purchase price, paying for mortgage insurance. Not to mention, owning a home isn’t just paying that monthly payment, it’s about paying for upkeep and maintenance of a house as well, which brings us to…
Prepare for ALL Aspects of Home Ownership
Making sure you can afford to purchase a home is also affected by how well prepared you are for home ownership. You no longer have the ability to call a landlord when something stops working. Instead, you have to pay to fix whatever has broken. You also are responsible for the upkeep and maintenance of a home. It’s important to factor those expenses into your home ownership budget when you’re looking at a house.
This is why, when you’re looking at different homes, it pays to pay close attention to details inside and out. All homes are going to have problems, even brand-new ones. When making a walk-through on a potential home, pay attention for items that may be falling into disrepair. Once you purchase a home, those items become your responsibility. Spots on the ceiling, cracks in the walls, or damaged wood can mean that the current homeowner didn't take care of the home... and it can also mean big spending for a brand-new homeowner.
Most contracts of sale stipulate that an offer is conditional on a home inspection. A home buyer can ask the seller to fix things found in the home inspection (or replace them) before agreeing to purchase the home. Unfortunately, a home inspection doesn't always show everything. A furnace can have cracks in the heat exchanger, where carbon dioxide can leak out into the air. Although a home inspector can look at some of the furnace, finding cracks in the heat exchanger can be nearly impossible without a contractor's tools — something an inspector doesn't have.
As you are buying your first home, remember that it's a real possibility that there will be things that fall apart and need to be repaired that weren't included in your home inspection. A home is an investment, and that includes being prepared for surprise costs when you need to fix parts of the home that aren't holding up.
Not only that, remember that things wear out over time. Although your home may have been in superb condition when you purchased it, wear and tear and normal lifespans can cause things to stop working. For those home systems and appliances that stop working after normal wear and tear, having a home warranty can reduce those surprise costs, limiting bills from thousands to under $100 for a full repair or replacement.
Getting a home warranty with a new home provides peace of mind