By Sarah Grimes from The Clerical Error
Purchasing a home is monumental occasion. It is also a monumental undertaking. If you are a first-time home buyer you’re probably feeling a bit overwhelmed. There are thousands of details to ponder, hundreds of questions to consider, and an extraordinary amount of effort involved in buying a new house. Who knew it would be so difficult?
Despite all the hoops a potential buyer has to jump, purchasing a home doesn’t have to be so exhausting. It’s simply a process. By taking one step at a time, you can be sure to avoid any pitfalls on your journey to homeownership.
The information below is certainly no substitute for a professional real estate agent, but it is a practical guide to help you along the way. Educating yourself about the process will not only make you a savvy buyer, it will help make your journey from a house hunter to a homeowner an enjoyable adventure.
By: Sarah Grimes
1. Buy or Rent
Deciding whether to rent or buy depends on a few key factors. Consider how long you plan to live in the area. If you cannot commit to spending at least five years in one place, purchasing a house is probably not the right option for you. Unless you are able to stay long term, you will likely lose money by investing in a home. Do you have good credit? Can you afford the additional expense of homeownership? Does the responsibility of owning a home appeal to you or are you more comfortable having a landlord handle maintenance issues and such? These are important questions to ask yourself, so answer honestly and with realistic expectations.
Before you start shopping for a house, be sure to sit down with your lender. They will evaluate your income, debt, and credit history in order to calculate how much the bank is willing to lend you for the purchase of a home. Come to this meeting prepared. When scheduling the appointment, ask what documents will be necessary for review. Be advised, pre-approval does not guarantee that you will be approved for a mortgage loan.
Remember, they are only looking at your current finances. It is important to consider how your future financial situations may affect your ability to pay the mortgage. For example, if you are currently a two income family, but anticipate one provider leaving the workforce to go back to school or stay home with children, you must be careful to purchase a house that will be affordable while living on a single income.
3. Need vs. Want
Decide what features you are looking for in a home. What items are definite needs? What items are desired options? Create and organize a list. Be sure to highlight all non-negotiable elements and include them in your search criteria.
Take time to consider your lifestyle. It is important to choose a home that will accommodate the way you live. Think about how a home should suit your needs now as well as in the future. For example, if you like to entertain you may want an additional bedroom for hosting overnight guests. Foresight would suggest that you look for a house that offers a spare room on the lower level. This way you will have a guest room that could easily convert into a convenient master bedroom if mobility becomes an issue for you in the future.
Determine the best location for you to dwell. How far are you willing to travel to work? Would you prefer urban, suburban or rural living? In what school district is the house located? (Note: even if you do not have kids, locating yourself near good schools increases the value of the home.)
House prices vary depending on location. Take this into account when deciding where to live. The willingness to position yourself just outside a “hot spot” could translate into major savings.
6. Current Climate
The housing market rises and falls according to supply and demand. Some areas experience more dramatic climate changes than others. Being aware of how the market is moving in your area can help you determine the best time to buy.
7. Scout the Market
Once you know what you are looking for start scouting the area in which you would like to live. Acquaint yourself with the market by getting to know what kind of houses are in your price range. If the area you desire does not have acceptable homes in your price range, you may need to reconsider the location or the type of house you are looking for.
Buying a home that you can repair or renovate may be appealing to you. You might even be able to find a good deal. Many homes on the market simply need a bit of updating to suit the buyers taste. However, this isn’t for everyone. You may be looking for a home that is move-in-ready.
Remember that most older homes typically need extra attention. Maintenance issues tend to be more labor intensive, as well as costly, in comparison to newer homes. If you are planning to make any renovations remember to budget demolition and construction costs.
9. Real Estate Agent
You do not have to use the specific real estate agent or agency that is listed on the “For Sale” sign. Choose a reputable agent by asking around for recommendations. A good agent should be known for their listening skills, honesty, and overall helpfulness. You can help you agent by being specific but not demanding. Consider their advice and respect their expertise.
Although it is not necessary, it is highly recommended that you hire an attorney to aid you in the process of buying a home. A lawyer’s expertise in the area of real estate is a great benefit.
11. House Hunt
Most real estate agencies have online listings. This means you can house hunt from the comfort of your couch. By entering in your specific criteria you can easily see exactly what the market has to offer you.
Good things come to those who wait. Finding your dream home may take a while. Even when you find it, the buying process is a tedious one.
Take time to visit any house that peaks serious interest. Make arrangements with your real estate agent to take a tour. Do not investigate the home without proper permission, even if it appears to be abandoned.
14. Be Prepared
Take a flashlight to the showing. Some homes have poorly lit basements and attics. The house may not have electrical service at all. You may not be an expert, but you will want to be able to observe for obvious problems. Also, wear good walking shoes so you will be able to explore with ease.
Evaluate the location of the house. Is the home situated in a safe neighborhood? If you have children, be mindful of busy streets, adjacent alleys, bodies of water, etc.
Is the home within earshot of a loud factory, train, highway, or airport? You may want want to take note if there is anything like a busy playground located next door or a dog kennel. Consider if the noise from these places are tolerable.