Studies have shown that more than 40% of homebuyers are nervous about the home buying process and consider buying a home as the most stressful event in their life. But the truth is, it doesn’t have to be stressful and anxiety-inducing if you ask the right questions before you start house hunting.
Many buyers begin their search by looking online for homes, assessing the images, and making an amateur decision on whether they can afford it. Others are so wrapped up in buying a ready-made home that they lose sight of the potential that cheaper, less attractive homes have. Going this route will quickly set you up for disappointment.
Additionally, you will waste a lot of time looking at homes that do not align with your needs. As a first-time homebuyer, there are some important questions you need to answer before you start to search for individual homes.
- What is my budget?
You may want to check out homes that are super luxurious and could include six or seven-figure price lists, but it will only waste your time. Before you begin the search for homes, determine the price range. You can do this by taking a look at the monthly budget and your savings.
Consider all the expenses you incur in a month and how comfortable you would be if you factor in a mortgage. If the budget is already stretched, you may not have the ability to add one more expense. But if you have been saving for the home and are ready with the down payment amount, you are halfway there.
In addition to the down payment, you need to set aside funds for other expenses like closing costs, taxes, and insurance. Average closing costs typically run between 2% to 5% of the loan amount. For instance, on a $200,000 home, you can expect to pay anywhere between $4,000 and $10,000 in closing costs.
Decide on an exact number that you are willing to make each month. Based on the same, you will be able to identify the neighborhood where you need to begin your search.
You may also want to consider the type of mortgage that works for you and then come up with a price range. Your income, credit score, and age will have an impact on the mortgage. For instance, if you are purchasing a second home, like a vacation property or rental investment, you might consider a reverse mortgage to leverage the equity in your existing home and make a bigger down payment. You can check this calculator to see how much you could get as a senior homeowner.
- Where should I live?
Besides the budget, there are several things you need to consider when deciding where to live. You will have to map out how close and convenient the home is to the places you visit regularly. It could be your office, the school, your parent’s home, or your favorite restaurants.
Keep in mind that where you live is an investment. Is the local market going up or down? Are there any new developments in the works? It’s important for you to understand the trajectory and potential of your neighborhood and city before you decide to live there. Also, look at the residential options in the area and choose something that fits your lifestyle better. Whether you prefer to settle down in a condo or a townhouse, think about which one would be the wiser investment in terms of location and nearby amenities.
Check out the neighborhood well and then consider your requirements. See if there is the availability of public transport nearby or if there are local schools in the area or not. Remember to see if the neighborhood has an active housing market or not. If the homes are sitting on the market for months, it will be hard for you to sell the house in the future.
- Why is the seller leaving?
Understanding why the seller is leaving can be beneficial for several reasons. Are they downsizing? Relocating? Unhappy with the home for other reasons? Gauging the motivation behind the seller moving helps you understand how likely and motivated they are to negotiate and how serious they are about selling.
- Should I work with a real estate agent?
If you are a first-time homebuyer, you will be better off with an agent. The real estate industry is not easy to explore and an experienced agent can make the job easy. They not only know about the best property in the neighborhood but can also help you with the mortgage programs that fit your needs. If the home needs some work, the agent will help you with professionals who can manage the repairs.
You may have to pay brokerage and it could increase the cost of purchase but it will save your time and reduce the effort. You will be able to take a tour of the best properties that fall within your budget. It is easy to find real estate agents through referrals or you can meet a few agents and then decide who you want to work with.
- What to look for in the house?
You will be taking a tour of several houses and you need to know what to look for in the house. It is easy to be driven towards the shiny appliances and bouncing light in the room but you need to look past all that. Look at your priorities and focus on what you require to live in a space in a way that supports the daily lives of your family. The flow of the rooms should feel ideal and you need to check the spaces that need work. Paint color and lighting can be easily fixed but you need to look for bigger repairs.
Remember why you are buying the house and what you want in your house, then head out for a tour and make note of everything that works for you. The house buying process can be stressful, but it is also one of the biggest milestones in life that you need to enjoy and cherish.