Before you jump into the wonderful world of home ownership make sure you are well prepared for home-buying process to find the home that’s the perfect fit.
“Doing good helps us do well, and doing well helps us do good.” _Dow Wilson
Know your needs.
First, examine your lifestyle. Do you long for bucolic pasturelands? Feel energized by urban cityscapes? Looking forward to a family-friendly suburban lifestyle? It’s important to think of the limitations each locale places on your lifestyle and the perks each has to offer — before making the commitment to buy.
‘You can’t start house hunting until you know what you’re looking for. Time for the fun part, put pen to paper and sketch out your dream property criteria – number of bedrooms and bathrooms, private garden, off-street parking, detached or semi-detached. Be realistic with your wish list though, and identify what is an essential property ‘must have’ and what you would be willing to compromise on. A crystal clear brief will help your agent sift through the bunch, and save a lot of time for all involved
When you’re looking for a new home to buy, it can feel like you’re pressed to make an offer on any home you’re interested in right now. Relax and take your time shopping around for this major move until you find the home that you’ll love living in for years to come. Shop around for mortgages too, as well as homeowner’s insurance. When you’ve found the home of your dreams, but it’s already under contract, you can still make a backup offer on that home.
Take the time to sniff out any issues with the property
Smell for mould, and animal-related odours. Knock on walls to see if they sound hollow. Open the dryer and the dishwasher – you never know if pests are living in there. Does the toilet flush properly? Does the heating/air-conditioning work? Is the flue functioning above the fireplace? Is the water pressure okay?
Determine How Much House You Can Afford
Lenders generally recommend that people look for homes that cost no more than three to five times their annual household income if the home buyers plan to make a 20% down payment and have a moderate amount of other debt.
But you should make this determination based on your own financial situation. Use our Affordability Calculator to see how much house you can afford.
Work with experienced professionals
Hire the most thorough, licensed home inspector you can find to pinpoint any issues that could potentially end up becoming costly repairs. To avoid conflict, make sure your lawyer is not also representing the seller.
Use your head, not your heart
Don’t be afraid to walk away from a bad deal. There will be other properties, maybe even better ones. Remember that this is a financial transaction and that your terms must be met.
Having a home custom-built to your specifications can be expensive. But are you ready to take on remodeling and updating an older home to meet your needs?
A remodel can often be expensive and in the end, is less satisfying, and finishing a project yourself, without experience, can result in the purchase of costly tools and the loss of your valuable time. Do your research before signing with a contractor or deciding to revamp an older home.
Heating and cooling systems.
While not as big an issue in temperate climates, if you live somewhere that gets very hot in summer or cold in winter (or both), good heating and cooling systems will make life much more pleasant. And because putting in central air conditioning or heating can cost a fair amount and the work is disruptive, finding a home where it’s already in place will save money and hassle.
Close or move on.
If you’re able to work out a deal with the seller, or better yet, if the inspection didn’t reveal any significant problems, you should be ready to close. Closing basically involves signing a ton of paperwork in a very short time period, while praying that nothing falls through at the last minute.
Things you’ll be dealing with and paying for in the final stages of your purchase may include having the home appraised (mortgage companies require this to protect their interest in the house), doing a title search to make sure that no one other than the seller has a claim to the property, obtaining private mortgage insurance or a piggyback loan if your down payment is less than 20%, and completing mortgage paperwork. Other closing costs can include loan-origination fees, title insurance, surveys, taxes and credit-report charges.
Negotiate as much as you can
You can use an agent to do the negotiating for you, but you can’t be sure how hard they will push for you. As a buyer, you should feel in control and as though you have nothing to lose through robust negotiation.
Don’t let yourself feel pressured
Real estate agents are expert salespeople. They may get you to rush over to the ‘perfect’ property and urge you to make an offer before someone else snatches it up. If you feel rushed at all, then back away. Time is on your side.
What specific features will your ideal home have?
While it’s good to retain some flexibility in this list, you’re making perhaps the biggest purchase of your life, and you deserve to have that purchase fit both your needs and wants as closely as possible. Your list should include basic desires, like neighborhood and size, all the way down to smaller details like bathroom layout and a kitchen that comes with trust-worthy appliances.
Carefully consider what you can really afford
Determine your budget based on what you can afford to repay now, not the maximum you’re allowed to borrow.
Gardens and yards are work
Almost everyone likes the idea of having a garden, but if you’re not used to maintaining one, you might want to think twice about whether you want to spend your weekends weeding and mowing the lawn.
A bargain is never really a bargain when located in a bad neighborhood. Sometimes lightning will strike and gentrification of certain areas will result in skyrocketing property value — but that’s rare. It’s better to take a chance on a smaller home — or one in need of repair — in a great area where the value will only rise.
Neighborhood Has Big Impact. This may be where you started your search, but have you really considered all aspects of your potential new neighborhood? School districts are of course important for families with kids, and proximity to work and family closely follows on many folks’ wish lists. But you may also want to look into how walkable (or bikeable) your neighborhood is, what community amenities (libraries, parks) are nearby and what public transportation is available.
Don’t commit before you’re ready
Owning a home is a huge commitment — and a more expensive one than some homebuyers realize. Before buying a home, make sure you know exactly what you’re getting into so you can decide if you’re financially and personally ready for such a large commitment. In addition to your monthly mortgage payment, figure out how much you’ll be paying for property taxes, homeowner’s insurance, HOA fees and other monthly costs of owning a home.
The school district will affect home value
Even if you don’t have kids, it pays to check out a neighborhood’s school district before buying a home, as living in an area with a sought-after school system raises your property value.
Coordinate the Paperwork
As you can imagine, there is a lot of paperwork involved in buying a house. Your lender will arrange for a title company to handle all of the paperwork and make sure that the seller is the rightful owner of the house you are buying.
What specific features will your ideal home have?
While it’s good to retain some flexibility in this list, you’re making perhaps the biggest purchase of your life, and you deserve to have that purchase fit both your needs and wants as closely as possible. Your list should include basic desires, like neighborhood and size, all the way down to smaller details like bathroom layout and a kitchen that comes with trustworthy appliances.
A land survey will answer boundary questions
Before making changes to your property, it’s a good idea to find out your exact property lines. You can’t always rely on the seller’s knowledge of the property, so getting a land survey will clear up any uncertainties you have.
Street parking. Though street parking is not usually an issue in the suburbs or rural areas, some towns and cities have strange rules and regulations regarding it. Where I live, for example, we are not allowed to park overnight in front of our own house. (Combine that with the too-narrow driveway situation described above, and oy vey!)
Check building plans for the neighborhood
having a playground practically in the backyard is hit or miss when it comes to resale — buyers with kids may see it as a selling point, while others may not. Before buying a home, find out if there are any building plans near your home to avoid surprises after you’ve moved in.
Continue negotiating after the inspection
If a flaw is discovered during your home inspection, use it to your advantage. If Brooke had known more about the roof issue before she closed on the home, she might have been able to use it during negotiations to get a price reduction. Even after inspections, you still have another chance to get a great deal. Staying under budget when buying a home gives you extra cash to add the upgrades and decor you’ve always wanted.
Obtain a home inspection.
Even if the home you plan to purchase appears to be flawless, there’s no substitute for having a trained professional inspect the property for the quality, safety and overall condition of your potential new home. You don’t want to get stuck with a money pit or with the headache of performing a lot of unexpected repairs. If the home inspection reveals serious defects that the seller did not disclose, you’ll generally be able to rescind your offer and get your deposit back. Negotiating to have the seller make the repairs or discount the selling price are other options.
Buy a property you can afford now, not later
Even if you’re pretty certain that you’ll be earning more in a year or two, you might also find that circumstances increase the other expenses in your life. Children, schools, new cars and travel plans are substantial costs. Make sure there will be room in your budget for you to live the life you want.
How much mortgage do you qualify for?
Before you start shopping, it’s important to get an idea of how much a lender will actually be willing to give you to purchase your first home. You may think you can afford a $300,000 home, but lenders may think you’re only good for $200,000 depending on factors like how much other debt you have, your monthly income and how long you’ve been at your current job.
Select an agent carefully
Prepare questions in advance of a meeting. Find out what kind of experience they have, how many buyers they are representing and if they can share any references. Speak to a few different agents before deciding on one.
The search can take longer than you think
Don’t operate on someone else’s timeline and don’t make commitments that will make things challenging if your property hunt takes a few months longer than you anticipated. If you’re renting, stay on a month-to-month agreement so that you are able to move without penalty.