Buying a home is one of the largest investments many people will ever make.
It’s also among the most complicated and time-consuming transactions. So before you sign on the dotted line, it’s best to ask yourself these key questions:
What are my needs for space?
How much can I afford to spend each month on my mortgage, utilities, and repairs?
Are there pre-existing problems with this property?
How is the neighborhood? Is it safe? Are the schools good? What kind of amenities are nearby (i.e., grocery stores, restaurants, sports)?
How much will I need for closing costs and my down payment?
What’s my strategy for a bidding war?
What are my needs for space? When you’re buying a home, it’s important to take stock of your needs for space. Do you need a lot of bedrooms for a growing family? A large backyard for barbecues and birthday parties? Or would you be happy with a more modest property that will save on monthly mortgage payments?
Planning ahead will help you stay within your budget and find the right property for your needs. Take time to sort through the options and be vigilant to rule out homes that may seem appealing at first glance, but might not truly serve your family.
If you’re unsure about what you need in a home, consult with a real estate agent who can help figure out the amenities that are best suited for you.
How much can I afford to spend each month? It’s important to be realistic about how much you can afford to spend each month on your mortgage. A good rule of thumb is that your mortgage payment should not be more than 30% of your monthly income. And remember—just because you’re pre-approved for a certain amount, that doesn’t mean it’s what you can actually afford to spend.
It’s also a good idea to have a budget for other costs associated with homeownership, such as property taxes, homeowner’s insurance, utilities, maintenance, and repairs. It’s impossible to fully estimate these costs in advance. But by planning ahead, you can get an idea of your potential monthly expenses and weigh them against your income.
Are there pre-existing problems with this property? It’s critical to be aware of any potential problems. This includes checking for any major repairs that may need to be done, as well as researching the surrounding neighborhood. Is this house in a flood plain? How is the foundation? When was the last time the roof was replaced?
It’s a good idea to have a home inspection done before making an offer on a property. This will help you get a better idea of the condition of the property and what repairs need to be made.
If you’re not comfortable with the condition of the property—no matter how beautiful or spacious the house is—it’s best to walk away and find a property that’s a better fit overall.
How is the neighborhood? Is it safe? Are the schools good? What kind of amenities are nearby? When you’re buying a home, it’s important to take into account the surrounding neighborhood. This includes researching crime rates, checking out traffic patterns, inquiring about the schools, and seeing how close you are to stores or activities that are important to you.
If you have children, it’s critical to research the schools in the area. You’ll want to make sure that there is a high-quality education available. You’ll also want to be aware of any negative reviews about the schools in the area.
How much will I need for closing costs and my down payment? There are a number of costs that you’ll need to budget for. This includes the down payment, closing costs, and moving expenses.
The downpayment is the amount of money that you pay upfront when you buy a home. It’s usually between 5% and 20% of the purchase price. So if you’re buying a $400,000 home, you’ll need to pay between $20,000 and $80,000 upfront.
Closing costs are the fees that are charged by the bank and the government when you buy a home. These costs can range from 2% to 5% of the purchase price. So in the example above, you would be paying between $8,000 and $20,000 in closing costs.
Moving expenses can range from $500 to $5,000, depending on how much stuff you have and how far you’re moving.
It’s important to budget for these costs ahead of time so that you’re not surprised when you sign the paperwork and are handed the keys.
What’s my strategy for a bidding war? It’s a problem that’s caught many off guard in the current housing market. That’s why it’s important to have a strategy in place. This includes knowing how much you’re willing to spend and being prepared to make a higher offer than the other buyers.
It’s also important to have your finances in order. This means that you should be pre-approved for a mortgage and have enough money saved up for your down payment.
If you’re not comfortable with the idea of a bidding war, it’s best to walk away and find a property that’s a lower price.
Buying a home is never an easy decision. That’s why these questions should all be considered ahead of time—preferably with your realtor—so they don’t catch you by surprise when buying a house! What other factors can you think of? Let us know what future homeowners might want to consider when purchasing a new home.