Regardless of what happened during the recession, the dream of buying a house is still on the minds of Americans. The advantages of owning a home have not changed. They can offer a financial strategy to your investments or provide a space for your growing family. Regardless of your reasons for buying a home, there are questions that must asked before you consider buying a home. What better place to get these questions than from a true real estate professional. A couple of agents from our office give their advice below.
Here are the three questions I would advise a client to consider before purchasing…
Is this the area you really want to be in? Location and everything that comes with it. Shopping, schools, friends and family, what has the neighborhood been like over the last 25 years and what is being planned for the next few years.
Do you get that feeling? Unless purchasing for a strict financial investment, you want to make sure you get that feeling of home. After a long day at work this is the place you want to rest your head down at night, where you can envision the thanksgiving dinner with the in-laws, or the summer time BBQ’s.
Can it fit your budget? It is the total monthly payment that you will write a check for each month. Is it doable in the long term because that will play a factor when purchasing such a large asset. Being financially comfortable beyond the day to day enjoy-ability of your new home
These are my two questions:
1) Do I qualify to buy a home?
2) How Much do I qualify for?”
More Questions to Consider
Is the contract offer contingent on an inspection?
We can’t stress asking this enough. Its easy to penny pinch during a time when you are spending lots of money, but hire your own independent inspector to go over the home. Then, negotiate the cost of the house down if there are issues with the roof, plumbing, installation etc. You can lower the cost of the home to offset the repairs, or have the seller fix it before the offer is accepted. Everyone situation is different, but if there are major issues from your home inspector, consider walking away from the deal if the seller is not willing to deal with it.
Am I spending the max amount I was approved for?
Here is an insider tip, you do not have to spend the max amount you were approved for! If you find a house that meets your needs, go for it. Even if it means that house is 200k and you were approved for 300k. Work with your budget and be smart. Gone are the days of getting approved for mortgage payments that were higher than 30% and of your monthly income.
Other Questions to Consider
- Are your other finances in order ?
- The reality is, if your finances are not in order, the dream of owning a home comes to a stop. As our agent mentioned, her top questions are, “do you qualify” and “how much”. When you take on a monthly mortgage, you still need to have some breathing room in your budget. Setting your sights on a home you can’t afford is just going to be discouraging. Find out what you can afford first, then find homes based on that number. its not uncommon that owning a home can come with some hidden costs that you did not plan for. If your mortgage payment might make you default on other payments, it means you are not ready to buy a home, at least in that price range.
- How long can you see yourself staying ?
- Just because it is a “good time to buy” does not mean you should buy a home. Even if your finances in order, what is the state of your current career? Are you wanting to start grad school soon? What are the plans of your partner? Even though the market and your finances might say it is smart to buy, think about your life and the life of someone you live with as well.
- What is your ideal neighborhood ?
- As Keenan mentioned above, location is a huge part of where you buy. Even more specific, the neighborhood you pick. One of the first things you can do before you buy a house, is walk into the local police station and ask about crime in the area you are looking at. Looking online is a great resource, but I find it hard to beat the knowledge of local law enforcement.
- What are my loan options?
- This question is a hard one to answer. Remember, qualifying for a loan is like getting approved for a credit card. A lender will look at your recent financial history and see if There are many different types of loans and each one comes with its own advantages and disadvantages. But it is asked because it should start you in a process of finding out what home loan you are going to use. We recently did a blog post on down payments that covers some information on more common loans. Also remember that if you are a veteran, you apply for a VA Loan that offers 0% down.
- What are my needs and wants?
- A tip I recommend is having a short list of wants for a home. I say short, because no home is perfect. You are going to have to compromise on somethings and accept others. You will waste your time if you keep looking for the perfect home with no flaws. The best home is the one that fits your needs and meets criteria for your “must have” list.
- Why is the house for sale?
- Even though you might not get a truthful answer as to why someone is selling their home. This is an important question with your negotiations tactics. The reason for leaving will tell you if the seller is in a hurry or is fine with not selling very fast. If they got a new job and need to sell now, you could probably work out a better deal. But other circumstances will work against you if the seller is patient and can wait.
Do You Have More Questions?
There is many more questions you might have about buying a home or the process that takes place. Owning a home is probably the biggest financial choice you will make in your life besides maybe saving for retirement. The reality is, even if you have no plans to purchase or sell, a real estate professional will be more than glad to answer any questions you have.