Buying a home is one of the biggest financial decisions you’ll ever make. That being said, you should be extremely cautious when making a final decision.
5 Things to Look at Before Buying a Home
There are several things to consider before buying a home. Of course, you’ll want a design you love, enough space for your family, and an acceptable yard, but buying a home requires so much more than checking off those boxes. Don’t make a deal until you’ve looked at these variables as well:
1. Building vs. Buying
Before you dive into your home search, do you want to buy outright, or do you want to build your home? Both options are worth considering and depend on what you want to accomplish. The decision you make will affect the rest of your buying process.
Buying a home is almost always cheaper than building and is much faster. All you need to do is jump through all the legal and financial hoops and you’re set to move in. When you build a home, the building process alone will take months and the expenses will be a lot higher.
However, there are reasons one would want to build instead of buy. When you build a home, you can customize the layout to be exactly how you want it instead of settling for what’s available in existing homes. It’s also a different market, so even when home buying is a struggle in the area you’re moving to, you might still be able to find a place to build. Finally, newer homes need fewer repairs and won’t run the risk of having mold or asbestos right away, as you can find in older homes.
Just as important as the quality of the house is where it stands. How close is it to where you work and will have to commute to every day? Are there schools nearby for your kids? What about proximity to grocery stores, restaurants, and movie theaters? You’ll want to take distance into consideration when looking at houses.
Of course, the stage of your life will affect the proximity to places you desire. When buying a retirement or vacation home, you’ll likely prefer a quieter, more spacious area than a suburb close to local amenities. Sometimes being too close to society is also a problem, like the noise of a busy highway keeping you up at night.
Your proximity to others should also be considered. Is the home in a safe neighborhood? Is there a Home Owner’s Association you would have to work with? If you’re choosing to live close to others, make sure you select an area you’ll feel safe and comfortable.
3. Potential Value
When you buy a home, how you treat it will affect its future value. If you take care of it and fix it up, you can sell it for more than you bought it for, turning a profit. Let it run down into disrepair and you’ll be lucky to break even.
Additionally, the area around you will affect your home’s potential value. If you live in an area being developed, the value of your home can skyrocket as new residences and businesses are built around you. Solitary homes can still increase in value but don’t have the same growth potential.
You might like the idea of buying a fixer-upper to try and flip it for a profit, but take into consideration the time and money required to do so. Homeowners can expect 2-5% of their home price annually to go toward maintenance and repair, but that number jumps up to over 10% for a fixer-upper. Make sure you take that cost into consideration when calculating future value.
4. Ownership History
You can tell a lot about something by looking at its history. People do it with cars all the time, looking for accident reports or repeat issues to be aware of before making a purchase. You should do the same with homes you’re looking at, investigating any past issues they’ve had or repairs that have been done.
For example, digging into ownership history, you might discover that a particular home has had a history of electrical problems for the past several years. You wouldn’t want to inherit that cost and inconvenience. Opt for a home with a clean record that shows more promise of being stable and livable.
You should also book an inspection in your Calendar to look for any current issues that may have been swept under the rug. You’ll likely only uncover small things from an inspection, but it’s better to be safe than sorry. You have the right to have a home inspected before you buy it and won’t be held liable to purchase if you uncover something that puts you off, like a botched plumbing system or a gas leak.
5. Personal Finances
Houses don’t come cheap. Unless you recently won the lottery or run a Fortune 500 company, you probably won’t be able to buy one with cash. You’ll need to make a down payment and set up a mortgage all while making sure you can keep home payments within your budget.
A general rule is that your monthly mortgage payment shouldn’t exceed 28% of your monthly income. This also includes taxes, interest, and home insurance. Let’s say you make $5,000 dollars a month. Take 28% of that, and you get $1,400, which should be the max that your home expenses should cost you monthly.
If something were to ever happen to your job or your income, you want to be sure you can stay on top of your house payments. Failing to deliver on payments can lead to a foreclosure, leading to the loss of your home. Make sure you’re not getting in over your head and that’s less likely to happen. Your Calendar can help you make timely payments and craft a budget that helps you get ahead on your payments.
Be thorough when buying a house. Don’t take shortcuts and don’t take the easy way out. By being diligent in checking every last detail, you can save yourself a ton of time, money, and effort in the long run. You might never have to move again.
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