I try to create articles that will last for a while in terms of relevance, but…
Quite a few people have mentioned to me that they are looking to purchase a home for the first time. It’s an exciting but complex process, and you want to do it right. Many go into it thinking they’ll only be staying a while, but it’s possible you’ll be there for quite some time. Ask me how I know….. If you are taking this step here are three important things to look out for:
- What’s The Budget?
Determine how much you can comfortably afford before starting your home search. The first question that you will be asked is “Are you pre-approved?” Banks will use your debt to income ratio in order to determine exactly how much they are willing to lend to you, but your personal tolerance should be the benchmark. Interest rates play into how much that loan will cost you. What it usually boils down to is a monthly budget. Everything is a monthly subscription now, from software to food. Factor your mortgage into it and make sure there is enough left to live on. Ideally, you should have 3-6 months of expenses in emergency savings. It sounds like common sense, but you have no idea how tough that is.
- What Shape is the Property In?
I always suggest to buyers that they hire a qualified home inspector. You need an expert to identify any potential issues or needed repairs. It’s important to run down the list of structural integrity, plumbing, electrical, roofing and insulation; not necessarily in that order, but this is an overview. If a seller knows there is a problem with any of those, they are required to disclose it. The issue is that sometimes they don’t actually know. Sometimes they don’t know about infestations of other living creatures within a property. This is one reason why a thorough inspection is very important, especially if you plan to live there.
- What Does The Location Tell You?
It’s important to make sure you are purchasing a future asset. One of the things I look at is what’s being built in a neighborhood. Book stores, coffee shops and healthy groceries are an overt indicator of economic strength. Casinos, payday loan outlets, or closing grocery stores… not so much. Some developers will do their best to raise property values by courting favorable vendors. I have also noticed, whenever a municipality pours money into the local art scene, the crime rate decreases. As an investor, that was a key indicator for me. Art fairs, farmer’s markets YES! Bail Bondsmen HELL NO :)
Another thing: If you have young children, contact the school district to see what they have to offer. It’s OK to disclose that you’re a first time home buyer! Most cities and counties are actually looking to you, as a way of “refreshing” the area. It’s also very important to work with someone who can help you point out the particularities of a market. That’s where the “Agent Page” (link to the right of this article) comes into play!