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5 Things to Know Before Buying a Home

Buying a Home | Home 101 | Money Saving Tips | Saving & Investing | Smart Money | HomeBuying 101 | Real Estate 101

This is a guest post from Kalyn of KalynBrooke.com

Although everyone has their own idea of what the American Dream really looks like, you can’t deny that for many, homeownership is toward the top of that list. There’s something incredibly satisfying about buying your own place, making it yours, and taking responsibility for the repairs and upkeep. Okay, maybe not so much that last one, but you know what I mean!

However, the home-buying process can be pretty complex, and for first-timers, it’s hard to know exactly how to navigate in between interest rates, inspections, and negotiating a great deal.

After purchasing two separate homes in the past 5 years, I’m nowhere near an expert, but I have learned a lot along the way. If you’re thinking of taking the leap into homeownership, this post will help you get it right the first time. Although, these principles are a pretty good reminder for those getting ready to buy again too!

Buying a Home | Home 101 | Money Saving Tips | Saving & Investing | Smart Money | Home Buying 101 | Real Estate 101

Be Sure of Your Investment

A home will be one of the biggest purchases you’ll ever make, which means you should consider ALL factors that come with owning a piece of property, not just the purchase price.

For instance:

  • Unless you’re absolutely certain you’re ready to put down roots and stay a while, owning a home might not be the best investment. Any less than 3 years in a home {as a general rule} means you’ll probably lose money when you sell it.
  • You don’t have to be an economy expert, but you should have a general idea of where the housing market is headed. No, you can’t always predict what’s going to happen {i.e. the 2008 crash}, but depending on interest rates and housing prices, you may want to hold off…….or jump right in.
  • Owning a home, albeit a bigger one, doesn’t just come with a monthly mortgage, it also comes with larger utility costs, maintenance, and repairs. Are you prepared to handle them? Make sure you have enough room in your budget to accommodate these extras.

After you’ve weighed all the costs versus benefits, and still believe owning a home is the best course of action, it’s time to move onto the next phase — house hunting. But there’s a few things you should know about that too.

Buying a Home | Home 101 | Money Saving Tips | Saving & Investing | Smart Money | Home Buying 101 | Real Estate 101

Location Really Does Matter

I’m sure you’ve heard the over-used phrase, “Location, Location, Location”, and wondered if it was really true. I personally cannot harp on location enough! Because you can’t change the location of your home, short of selling it and moving to another area, you have to make absolutely sure you get it right.

A great way to start if you’re not familiar with the area, is to search the local news online archives for street names and neighborhoods. If a major crime happened there, you bet the news covered it. And while it doesn’t have to completely rule out a section of your town or city, it will help narrow down the options.

Another cause for concern, particularly if you live near the coast, lake, or river, is flooding. Get a hold of flood maps {you can find most of them online} to get a general feel of where those sections are. Again, it doesn’t have to rule out the home, but it will determine whether or not you need to add flood insurance as an additional cost.

Lastly, ask yourself if you can be happy with how close the home is to other homes. Do you want a big backyard? Could you add a fence for privacy? Generally, the closer you are to conveniences, the less space you’ll have outside, and vice versa. Determine the top 3 non-negotiables, then get as close as you can to meeting them.

Buying a Home | Home 101 | Money Saving Tips | Saving & Investing | Smart Money | Home Buying 101 | Real Estate 101

Don’t Be Concerned with Cosmetics

Every time I watch HGTV and see a couple who can’t stop talking about the awful paint on the walls, I want reach through the screen, put my hands on their shoulders, and tell them paint does not matter. Paint is easily changed! They are letting color or the way the home is styled to affect and “blind” them to what really matters.

A good home should have good bones. Meaning, the structure, foundation, and roof should be your primary concerns. Then comes layout. Does the home have a good flow? Does it function the way you need it to? If not, is that something you can live with for now, but may want to change down the road?

Realtors can sell you on any home, so make sure you know ahead of time exactly what you’re looking for. And don’t let the cosmetics sway you, whether they’re good or bad.

Buying a Home | Home 101 | Money Saving Tips | Saving & Investing | Smart Money | Home Buying 101 | Real Estate 101

The Banks are Not Your Friend

If you’re able to pay cash for your home and bypass a bank, do it. But for the rest of us, we don’t always have that option. In that case, it’s good to go into a bank and request a mortgage with as much information known beforehand as you can, because sometimes banks will take advantage of you!

From my experience, banks have always tried to push Adjustable Rate Mortgages {ARMs} over Fixed Rates, which means you might get a really good rate now, and even better if interest rates continue to lower, but you can never guarantee that will happen. On the other hand, banks are betting that interest rates will go up, so you owe them more interest over the life of your loan.

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Another thing banks often do is approve you for a higher mortgage amount than you can reasonably afford. Remember, they are doing this based on estimates that you give them, and can’t possibly know every little expense you have. Go through your budget and come up with a monthly mortgage number that is comfortable and doable for your current finances. Then play with an online mortgage calculator to find the average price you should be looking for.

Buying a Home | Home 101 | Money Saving Tips | Saving & Investing | Smart Money | Home Buying 101 | Real Estate 101

 Expect the Worst

I don’t mean to be all doom and gloom, but when you’re in the fog of buying a dream home, you forget about all the responsibilities that come with it. When you buy a house, you also buy the responsibility to repair and maintain anything that breaks. And yes, things will break! And always when you least expect it.

Rather than invest any extra money in new furniture or a shopping spree at HomeGoods trying to get your home “just perfect”, set aside a portion of that money {at least $1,000} for an Emergency Fund.

This doesn’t eliminate the frustration when the air conditioner breaks or you have to replace an appliance, but knowing you have money set aside to cover or help with expenses is a real comfort, and will save you from a bigger financial catastrophe in the long run.

While it might seem like owning a home is the next step for you, I would be remiss to at least acknowledge that renting does have it’s perks. Depending on lease, you can easily pick up and move somewhere else. You also don’t have to maintain the property or fix repairs, thus leaving more time to spend with your family, doing what you love.

But there is also that sense of pride in having a place that is yours to do with as you please…..to work on with your own two hands, and create a cozy haven where families can gather and can become your refuge. So if you’re in, go all in, but now you know ahead of time what to expect!

 

Kalyn Brooke is a life management expert for busy women who crave a simpler and more organized life. Through her recognizable, down-to-earth approach, she provides a daily dose of inspiration and guidance, whether you’re looking for smart money tips, time saving routines, or anything in-between. When she’s not experimenting with ways to do even the most mundane tasks more efficiently, you can find her crafting detailed to-do lists in her bullet journal, or indulging in—yet another—personal development book. Meet Kalyn and learn how stay on top of it all at KalynBrooke.com.

 

Buying a Home | Home 101 | Money Saving Tips | Saving & Investing | Smart Money | HomeBuying 101 | Real Estate 101

10 Comments

  1. HeatherB
    August 21 at 10:58AM

    Excellent suggestions!
    I have 2 others I would like to throw into the mix:
    1. Regarding the tip that the bank is not your friend: I ALWAYS suggest working backwards, as Kalyn suggests. Figure out how much you can afford as a monthly payment, subtract what you estimate will be your monthly insurance allotment, subtract what will be your monthly property tax allotment, and don’t forget to subtract your monthly PMI (I was not aware of this and it nearly killed me when I bought my first home–an unexpected couple hundred bucks is no bueno!!). Take what is left, and use a mortgage calculator to figure out based on current interest rates and mortgage length what price tag you can afford. Don’t stray from that number.
    2. I recommend getting a home inspected by at least two different inspectors. I have always done this; they have always each found things that the other missed; and I have never had a surprise of a problem missed on inspection. I got this idea after I had a friend buy her first house eons ago (when I was still renting)–her inspector missed some really big (and costly) things that should have been found on inspection. She was literally out more than $10,000 in unexpected repairs, having used nearly all of her savings for a down payment, leaving her with major issues (like bathrooms that didn’t work she couldn’t afford to fix). It took her several years to really get it fully livable. The remedy? a refund of the money she paid her inspector. A lawsuit is always a possibility–maybe she can recoup, but probably not as most inspectors have a waiver/limitation on liability (and it might depend on where you live). Why not save yourself the trouble and hassle, and just get a second inspection. In the grand scheme, they aren’t that expensive, and it can provide you an opportunity to learn more about your new home.

    Best wishes to all on the hunt–SO. MUCH. FUN!!! :~)

    • August 21 at 05:45PM

      That is a great idea to get two home inspections. I know when cash is tight, it’s harder to justify those kinds of expenses, but I completely agree — there have been too many horror stories about inspectors who don’t do their job properly to merit the extra cost!

  2. Bonnie Jean
    August 21 at 05:17PM

    One thing that I learned the hard way, is that most home inspectors only inspect what they can see. They may turn on a few lights and check if the heat or A/C goes on… but they do not look at anything inconvenient. Our inspector did not truly inspect our furnace. He did not check behind it, and we almost died from carbon monoxide poisoning and a fire because of the hole in one side of the furnace. The previous owners had been using the fire place we later discovered and we were duped. But it was just the beginning of the problems. There was black mold in the bathrooms… they had used paint and quick cover ups… the vents only went to the attic and not outside… the wiring was not done properly and there was like ten miles of cable in the attic. We had followed him around, but did not know what to check. Now we know. I recommend hiring a local carpenter, mason, plumber, electrician, pest control expert (recommended by someone other than the realtor)… and pay them their hourly rate. If you are new to an area, a family business that has been around for more than 30 years is best, because they depend on good work for their livelihood. A large company that has a corporation behind it may not be the best choice. Ask them what they would recommend doing if they were buying the house ? You do not have to do it all… but you will have a better idea of what is going on. Know the water table in your area and the history of flooding. Check with the town clerk. Do your homework. We eventually lost our home after almost 7 wasted years of repair after repair… the first one being the furnace and the entire HVAC system … which meant we could not do the decorating or any of our original plans. Also check with local landscapers about plant problems in certain areas (and local colleges with agriculture departments). We lost all of our grass that we planted and most of our plants and trees to a fungus that was a local issue. We would have done things totally differently. So much time, effort and money for what ?

    We were lied to by the owners and the home inspectors take no responsibility in most states. The extra money you pay would be well worth it in the long run. I so want a home, but never want to go through that again. And new homes have just as many problems as old. Corners are often cut to maximize profit. Buyer beware !!!

  3. August 22 at 07:51PM

    Great points here. I would also point out that be aware of closing costs. It is surprising that many are not aware of it. Also, make sure what responsibilities come with the house (home owners associations, etc.) and tax rates. Depending on a location, you may need to pay extra taxes when selling shortly after the purchase. It is definitely wise to do your homework.

    • August 24 at 03:06PM

      Oh, you are absolutely right about closing costs! I recently bought my first home and was shocked at just how much closing costs can end up being, even on the little starter home I bought.

  4. August 30 at 12:13PM

    Definitely get an inspector and keep in mind what Bonnie said in her comment! Ours did a fairly thorough job, but there were a couple things he missed through no fault of his own. A friend of mine asked me lately about buying a home in a very rural area as we did 2 years ago. She wanted to know what I wish I’d known. I wish I’d known to set aside even more money for repairs and renovations! But we’re getting there. Our house has those “good bones” that are so essential, and now our goal is to transform it into a comfortable, energy-efficient home.

  5. January 20 at 11:02AM

    There are a number of factors that really counts while purchasing a home because it will be one of the biggest purchases you’ll ever make.These 5 Points are very handy to consider a while before home buying.

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