10 THINGS TO CONSIDER WHEN BUYING A HOME
What comes to mind when you think of buying a home?… Excitement? Hope? Maybe a little bit of nervousness?… Buying a home is an exciting process, but it’s also a very important decision that shouldn’t be taken lightly. Keep reading to learn some of the questions you should be asking yourself during the home buying process! If you’re looking for more info you can download our free buyers guide below!
1.) LOCATION, LOCATION, LOCATION!
You’ve heard it before, I’ll say it again. Location is one of the most important- if not THE most important factor to consider when buying a home. You can change a lot of things, but location isn’t one of them. Don’t be too quick to compromise on location during your home search, or you may find yourself paying for it later.
2.) SCHOOL DISTRICT
But I don’t have kids in school. Why do I care? You care, because it’s likely one of two things is going to happen in the future. Number one, you are going to have kids and then you will care about the school system, or Number 2, you are going to sell the house at some point, and when that time comes, the school system could matter to that next buyer.
3.) TAXES, HOA, & ASSESSMENTS
Remember your Grandpa muttering the following words of wisdom… “There’s only two things certain in life… death & taxes”. Well, the latter holds true when it comes to buying a home! You are going to be paying property taxes. Taxes are not equal across the board, so you need to understand the tax rate for any home you are buying. What will your annual tax bill look like? Does your home sit within a city tax zone as well as county/state taxes? Something else to remember is that your purchase price will become your assessed value, or in other words, the value you will be paying taxes on.
Let’s say you are purchasing a home from Mr. Smith, who has owned the home for the last 20 years. The home has not been reassessed during his ownership, meaning his assessed value is currently equal to what he paid 20 years ago which is $200,000.
You are buying the home for $350,000 which is today’s market value. It’s important to realize that your tax bill will ultimately be based on your purchase price of $350,000. Sometimes when lenders pull estimated taxes, they look at the previous years tax records to gather the amount. If the home hasn’t been assessed in a while, this can be very misleading. Make sure to ask questions so you understand what your true taxes owed will be for the year ahead. Also be sure to research whether your home falls under an HOA (homeowner’s association). If so, you could be subject to additional monthly or annual dues, along with restrictions you must abide by.
4.) MAINTENANCE
It’s easy when looking at a home to be mesmerized by certain features. For instance, that painted wood siding that gives the house so much character, or that in-ground pool that your family will enjoy during the summer months. While there is nothing wrong with this thinking, you should also be aware of periodic maintenance that will be required to keep these things in good condition in the years to come. The last thing you want is to be surprised with maintenance costs you weren’t expecting.
5.) UPCOMING COSTS
Let’s face it, owning a home does cost money. Be aware of any big ticket items that are nearing their life expectancy so you can budget accordingly and not be surprised by Murphey’s Law once you move in. I’m talking about things like furnace, A/C, roof… If these components are older, you should plan for their repair/replacement as these things can get expensive, especially if more than one goes bad at the same time.
6.) THE ‘ODD’ FACTOR
If you find yourself touring a home and you immediately notice how strange or unusual the home is, take note of that and pause. Don’t necessarily run, but do pay attention. Anything that seems odd to you is likely to seem odd to future buyers when you go to sell the home. Lots of things can be corrected and or made up for with pricing appropriately, but this warrants some additional thinking before pulling the trigger. I’m talking things like super steep driveway, backing up to interstate, very unusual layout, very low ceilings… things of that nature.
7.) AREA DEVELOPMENT
This kind of jumps back to ‘location’, but simply put, be aware of your surroundings. Know what’s going on on the properties surrounding your home. For instance… Does the home back up to a big open field? Ask yourself, what is this field zoned? Is there any development planned for this field? Am I ok if at some point this field becomes something other than a big open field? Be aware of anything in the works that could positively or negatively impact the value of your new home.
8.) UTILITY AVAILABILITY
You need to know what utilities are available at your home for a few reasons. Number one, you need to be able to estimate what they will cost you. If your home is on public sewers, you may have a higher monthly water bill than if your home was on septic. On the flip side, if your home is on septic, you will have higher maintenance costs over time than if your home is on sewers. Neither is bad, you just need to know where you stand. .Another good example is your heat source. Gas, electric, or propane heat? Depending on the source, you may have different monthly costs. Another good tip is to ask the seller to share average utility costs with you. Number two, you need to have the opportunity to get any additional inspections that may apply. If your home is on septic, this usually warrants a septic inspection. If your home is on sewers, but is older and has clay pipes running from the home to the street, you may elect to take it one step further and get a camera inspection to see condition of these old pipes. Inspections you choose to get are totally up to you, but you need to have this knowledge up front in order to make a decision on how to handle.
9.) UPFRONT COSTS OF BUYING A HOME
Piggybacking off of #8, you need to anticipate the upfront costs that are associated with buying a home. These include things like home inspections, earnest money or ‘good faith’ deposits, and possible upfront appraisal costs. Your real estate agent and lender can help you to determine ballpark costs associated with these items so you can plan ahead.
10.) CLOSING COSTS & DOWN PAYMENT
In addition to the upfront costs mentioned above, it’s important you have a clear understanding on funds you will be expected to bring to closing. Together with your lender, we can help paint a clear picture of your down payment, closing costs, prepaids or agent compensation you’ll need to account for. By knowing these items up front, it can help you understand what you can truly afford, and how to plan for these items. In some cases, it’s even possible to negotiate some of these items into the contract, but you need to know these figures up front in order to have this option to give it a go.
These are just some of the things to be aware of when you are planning to buy a home, and searching for the right one! I hope you find this list helpful as you work towards becoming a homeowner. By choosing a competent real estate agent and lender, you will be ahead of the game. Feel free to reach out to us with all of your real estate needs!