Buying a new home is probably one of the most exciting yet stressful decisions of your life. Following find a list of questions you should be asking yourself to ensure you are ready to take this step.
1. Am I Mentally, Emotionally, and Financially Ready for this Responsibility?
Owning a home is a commitment on all fronts. You will need to invest some blood sweat and tears to make this house your home. You are your own landlord and need to prepare in advance in case some major repairs need to get done. Aside from the financial commitment that we will go into further detail about, you should put aside a sinking fund in order to address repairs that you can foresee may happen. A good rule of thumb is to set aside $5000 for any future repairs to your home.
Being prepared to take on a home is essential and will avoid a lot of anxiety. Know that no home is perfect and there will be hurdles ahead, but that this is all part of owning a house and making it a home for you and your loved ones.
2. Am I Financially Stable Enough to Make This Investment?
If you are able to pay cash for a home, then you may be able to skip this question. However, many of us will have to seek assistance from a lender or broker in order to afford the home of our dreams. They will definitely be looking into your credit history and income. Take some time to get your credit score so there aren’t any surprises.
Before you make a purchase offer on a home, it’s important to get pre-approved for a mortgage. A pre-approval from a lender will tell you how much home you can afford and it will help you later in the process in showing that you are a serious buyer and will be able to close quickly.
3. What is My Budget?
When looking at a new home at times we only consider the cost of the home itself, not all of the hidden extras that come along with it, for example, taxes. You will need to take into consideration how much your monthly mortgage payment is, plus the bills and taxes and anything else that may need purchasing (furniture, gardening expenses, etc.)
To get started click here to estimate your monthly mortgage payment.
4. How Am I Going to Finance the Home?
Here is where we recommend you bring in the experts. This process can be overwhelming for new home buyers and it is in your best interests to seek advice from a good loan officer that knows what is available to you and is able to work with you to meet your wishes reasonably.
Will you be choosing a fixed-rate or variable-rate mortgage? You can choose a 10, 15, 20, or 30-year mortgage. The longer mortgage you choose, the lower your monthly payments, will be but the more you will pay in interest over the life of the loan.
5. Did the Home Pass The Inspection With Flying Colors?
One of the most tragic things to happen to new homeowners is finding out the home has or has had substantial damage and they now own a money pit.
Paying for the inspection is, in our opinion, essential in the home-buying process. It is worth the budget to make sure you aren’t signing up for something that will cost hundreds of thousands down the road.
Demand to see the C.L.U.E. (Comprehensive Loss Underwriting Exchange) report from the seller. This report offers insight into all insurance claims that were filed for the home within the past seven years.
Once you have feedback from the inspection you may also have more negotiating power over the price of the home.
6. What Should I Expect For Closing Costs?
Closing costs can include attorney fees, real estate agent commissions, home inspection bills, and title insurance, all of which are typically due at the time of signing.
According to a recent survey done by Zillow, typically home buyers will pay between about 2 to 5 percent of the purchase price of their home in closing fees. So, if your home cost $150,000, you might pay between $3,000 and $7,500 in closing costs. On average, buyers pay roughly $3,700 in closing fees.
7. Why Am I Buying a Home?
This may seem obvious, but understanding why you are making this financial investment will not only help you along the process, but it will help your Realtor® understand the goals in order to meet your objective.
Are you moving to a new area? Is your family growing? Are you looking for a fixer-upper? Is this an investment?
These criteria are needed in order to begin the search process for your new home and to help you set expectations for yourself.
8. Which Realtor® Is Right for Me?
Finding a Realtor® these days is simple, finding one that is the right fit for you may take a little more effort on your part, but is well worth it in the end.
Look for someone that is well-established in the neighborhood in which you are looking in. See if they have a large network supporting them. Read online reviews try searching on Zillow or Google. Follow them on social networks so you can get an idea of who they are and how they work. And finally, meet in person to establish some sort of connection. You will be working with this person for a couple of months, exchanging emails, and talking on the phone. You need to make sure you trust this individual and are confident that they are putting your needs first.
9. How Do I Make The Right Offer?
Making an offer on a house does come with some risks. If it is too low, you may risk losing the home to another buyer. If it is too high you may be the one out of pocket. Your agent should help guide you to understand which offer is the best fit.
Also, be sure your agent is on top of this process with the seller, in case they are looking for a counteroffer.
When making your offer, do not forget to keep that budget in mind as we previously mentioned. Don’t go to the top of your budget when you know you may have additional costs to consider.
10. What Else Should I Be Considering Besides the House Itself?
The house may have everything you have ever wanted, a two-car garage, a pool, gated community. However, you should take a look at everything surrounding your home to make sure the home you want to live in is within a community you would like to spend your time within.
Take a look at the surrounding neighborhood is it established? Up and coming? What are its safety records? Are you close to public transportation, or more secluded? Both of these are beneficial to different buyer profiles. Which school district is your home within? All of these factors outside of the home should be weighed when purchasing your home.
Not only will all of these items be the makeup of your life for the next several years, but they can help in increasing the resale value of your home in the future.
