Buying a home is the single biggest investment you’ll ever make. It’s very important that you purchase the right home for your needs, budget, and life circumstances. Otherwise, you may end up in a financial commitment that you can’t get out of easily. To help you make the best possible decision, we recommend asking these 12 first-time home buyer questions before purchasing a new home.
Sure, the bank might be willing to approve you for a large mortgage – but can you comfortably afford it? Before house hunting, we recommend taking a good look at your overall income, current debt and monthly expenses. According to NerdWallet, home buyers should use the “28% / 36% rule, which states that you shouldn’t spend more than 28% of your gross monthly income on home-related costs and 36% on total debts.” Home buyers should also consider their long-term financial goals. For instance, how much money do you need to save each month for retirement, education, etc?
If you need to take out a home loan in order to purchase house, carefully consider the type of mortgage you need. Keep in mind that the location of the home, length of time you plan to stay, your credit score, and competition from other buyers are all important factors to consider. Different types of mortgages to consider include a conventional mortgage vs. a government-backed mortgage and a fixed-rate mortgage vs. an adjustable-rate mortgage.
Without a solid credit score, you may not qualify for a home loan. In order to secure a mortgage, most banks require a strong FICO credit score. This high credit score proves that you have a history of paying off your debts and are a responsible borrower. Those with higher credit scores are usually able to put less money down on a down payment. They also obtain lower interest rates.
Many first-time home buyers forget to consider the closing costs (and moving costs) involved in the sale of a home. They forget that the actual cost of buying a home is expensive as well – not to mention, the cost of moving to that home. Occasionally, home buyers may be able to negotiate these closing costs with their Realtor and home sellers.
While looking at a house, be sure to ask the seller about utility costs. For instance, how much does water, electricity and gas cost on a monthly basis? If the home is larger, then it will typically cost more to heat and cool. In addition, certain features, such as swimming pools and hot tubs, can dramatically raise the monthly water bill. Make sure you can actually afford these utilities and include the average costs in your home-related costs category (mentioned above in point one).
If you plan to live in the home for just three to five years, then it probably doesn’t make sense to splurge on a home at the top of your budget. Short-term homes, such as starter homes, should also have good resale value – meaning they will sell easily. If you plan to live in the home for longer than five years or for life, then purchasing a home at the high end of your budget may make more sense.
Be sure to ask your Realtor about property taxes for a home before buying it. Property taxes are a percentage of a home’s worth. These taxes typically pay for local schools, public transportation, roads and infrastructure. Property tax rates vary depending on location. Some areas of the country have much higher property tax rates than others. Home buyers who don’t ask about property taxes could end up blindsided by a high bill. For this reason, it’s important to look into a home’s property taxes before purchasing the property.
This is one of the most important first-time home buyer questions to ask – especially if you plan to sell the home in the future. Home buyers should always consider a home’s resale value prior to purchasing a house. To assess a home’s resale value, consider the price, nearby comps (comparable sales), location, local schools and condition of the home. If the home lacks resale value, then it’s probably not a great investment.
When it comes to real estate, the most important factor in whether or not to buy a home is the location. Some red flags that the home is not in a good location includes: 1) If a home is located near a highway or loud area; 2) If the home is located near empty storefronts or a place where people and businesses are leaving; and 3) If the home is zoned for bad schools. Purchasing a home that is located in a safe area with good schools and close proximity to amenities will help its resale value and your quality of life on a daily basis.
Oftentimes, buyers are so focused on the home itself that they forget about the next-door neighbors. For instance, are you looking to live in a community with lots of families and young kids? Or would you prefer a neighborhood where most (or all) residents are older and retired? Make sure to ask the seller about the community before buying the house – and watch out for these 7 types of bad neighbors as well.
Unless you’re purchasing a fixer-upper with the intention to renovate, it’s very important to consider the overall condition of the home and its systems. Pay special attention to the bones of the house – not just the cosmetic features. The condition of the roof, HVAC unit, electrical wiring and plumbing systems are particularly important. Also, make sure to ask the sellers how old the systems are and when they were last replaced. Finally, whatever you do, don’t skip a home inspection when buying a house for the first time.
Is the home part of a community with a homeowner’s association? If so, be sure to ask about the fees and services provided by the HOA. For instance, does the HOA cover the landscaping, pool upkeep and other maintenance services? You want to know what exactly you’re paying for when you pay to be part of an HOA.
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