Buying your first home is an exciting time filled with anticipation and dreams of the happy days that lay ahead. But, don’t let your excitement cloud your vision. Thinking clearly now will save you unexpected headaches in the future.
How much house can you really afford? Your first step towards owning your own home is finding out exactly how much home you can afford. The National Foundation for Credit Counseling (NFCC) recommends that you spend no more than 25 to 28 percent of your net monthly income on mortgage, property taxes and insurance.
Once you calculate this figure, you can quickly calculate a price range by using an online calculators such as Market Watch’s Home Buyers Worksheet.
Keep in mind that you will also need to pay closing costs that typically amount to 2 to 3 percent of the purchase price.
Decide on the type of home you want.
Sometimes new home buyers set out with the goal to buy a house without considering the kind of house that they really want or knowing what will really meet their needs. Sitting down with your spouse and/or family and discussing what features are important to you makes it easier to select a house when the time comes.
Make a list of the features you simply can’t live without – like a big backyard for the kids or a roomy laundry room; features you’d like to have – like that walk-in closet or cathedral ceilings, but don’t need: and the dream features – like the full size greenhouse in the back or that in-ground pool. While dream items may seem out of your reach, adding them to the list gives you something to shoot for and you never know when a great opportunity may surface.
Now that you have a price range to aim for and know what you want in a house, it’s time to begin shopping around to see what is available and how the prices compare to your price range. Keep in mind that property value varies and two similar houses in different neighborhoods may have significantly different price tags. Also consult with various real estate agents to see the different pricing options that are being offered. A quote from Century 21 may vary from a quote from a local company like Right Residential.
Consider the neighborhood:
Take a drive through the neighborhood at varying times of day. What appears to be a tranquil haven during the day may suddenly turn into chaos after kids are home from school and people are out of work. A late night trip through the neighbor might reveal activity you don’t want your kids to be exposed to.
Explore Community Resources:
Check out the reputation of schools and explore neighborhood parks – again a late night trip might be a good idea. If possible, talk to neighbors or others whose kids attend the schools to get a personal opinion.
Check for libraries, museums, shopping areas, dry cleaners and any other services you use on a regular basis. Although having to travel across town to the cleaners may not be the deciding factor in the home you purchase, it will affect your life once you move in.
Watch for Red Flags:
Keeping your eyes open for potential problems with the house or property can prevent you from expensive repairs in the future. If any rooms are off limits during your initial walkthrough, do not sign anything until you’ve had a chance to explore all areas of the home – including the attic and basement. Hidden plumbing or structural problems can cost a fortune to repair. Watch for signs of water damage, structural damage or signs of recent repairs, as these may indicate an existing problem with the property.
Avoid Quick decisions:
Avoid making a decision before discussing it with your spouse and weighing the options. What seems like a great deal may have hidden costs such a longer commute to work, the need for landscaping or renovations to the home. Weigh all you options before making a decision you will have to live with for years.
Sometimes, new homebuyers are so eager to buy a place of their own that they choose a house that really isn’t what they wanted and end up living in a house that simply doesn’t meet their needs. Although you may not find your dream house, taking the time to find the house that is right for you will bring you years of happiness.
Not matter how you look at it, there are likely to be some areas of compromise when you are buying a new house. You will likely need to make some tough decisions, such as choosing between a great neighborhood with a higher price tag or living in a decent neighborhood and paying a lower mortgage. The choices aren’t always easy, but entering the home buying arena with the expectation that some compromises will be necessary puts you in a position to make sound decisions that will last you a lifetime.