10 Questions To Ask Yourself Before You Buy A Home
In the housing market of 2012, it seems very easy to find a great home for a low price
. Many people are becoming home owners for the first time. However, in light of the housing crisis that unfolded in the few years before, it behooves every potential home buyer to ask themselves a few introspective questions before they sign all the paperwork, just to be sure that this is the best decision.
Am I ready for this long-term commitment? A traditional home loan is for 30 years. Many loans are available for shorter terms, but even then they start at a minimum of 10 years. Are you ready for this kind of commitment? If you think your life is going to have major upheaval in the next few years, if you don't feel like your roots are deep enough in your community to stay for the long haul, buying a home right now might not be the best idea.
Does this commitment match my long term goals? Are you looking at smaller homes, but someday want to have 4 children? Do you want to eventually be promoted into a traveling career but are thinking about making an offer on a house that requires lots of upkeep and yard work? The house you're looking at may be perfect for right now, but if you have goals that are drastically different than your current life, be sure to consider all of those when looking at properties as well.
Am I rushing the process just to get my hands on this one property? Although you may have found the perfect place, be sure your credit rating is as good as it can be, that you have adequate funding for down payments, and that you're not rushing the process out of fear of losing a property. There will always be another great house option if this one doesn't work out. If your financials aren't in the best order, it might pay to let this property go, improve your financial picture to its full potential and try again when you're truly in the best position.
What can I truly afford? Even in this housing market with stricter lending rules than the past decade, some lenders will offer larger loans than are wise to take on. Your debt-to-income ratio is important to keep in mind, and some simple calculations at websites available online can help you figure out what a reasonable house payment and house loan is for you. Be sure to stay out of the debt danger zone or you could be setting yourself up for a loan default in the future.
Can I create a move-in fund ahead of time? There are fees associated with new loans that won't always be disclosed up front, and these can catch you off guard sometimes, even compromise your loan process. You might want to hire movers to pack and move your things, and there will doubtlessly be unforeseen costs with the new house. Consider setting a little extra aside before you start the purchase process to pay for all these incidentals. That way you don't also rack up unexpected credit card debt as you're paying for unexpected expenses.
What are my new home must-haves, and my new home wishes?Before you start looking in earnest, come up with a list of deal breakers and wishes. The former are items that the house must have or you're not interested. For example, my wife required the last home we bought to have its own mailbox and a soaker bathtub. The latter are ideas that would be nice to have but aren't vital to a purchase. Here, my wife wishes to someday build a new house where we can name our own street, but this isn't a deal breaker for her.
Do I trust my agent? It may seem like you can do the house hunt thing on your own, but having a trusted real estate broker by your side, watching out for you can save you time and money, and even save your skin should you find yourself interested in a house that under the pretty facade has major problems. One buyer interviewed told the story of their house having a bedroom that wasn't finished to code, and because they had an inexperienced broker with them who didn't catch this violation, they bought the home thinking they had certain square footage, when according to county standards it was smaller. Now their home is worth less than they thought and they're unable to refinance because they paid more than they should have for the home.
What is the neighborhood like at different times of day? The feel of a neighborhood can drastically change during the course of a day, and even the course of a week. Drive through your potential neighborhood at several different times of day and the week, just to get a feel for any changing vibes that could be a deal breaker.
Is there a Homeowners Association? Most real estate listings will indicate whether there is an HOA in your potential neighborhood. If there is, knock on a few of the neighbor's doors ahead of time and ask them if they're happy with the HOA. You'll get a better sense from them if they are subject to a nit-picky HOA, or if they're pleased with them. This could be a major thorn in your side later, so be sure to investigate thoroughly.
Do I have a lender I feel comfortable working with? Although most realtors have partnerships with mortgage lenders, you aren't required to work with the one your realtor suggests. Bringing your own mortgage dealer to the table can help you get through the home buying process easier and with more trust. Consider developing a relationship with your neighborhood mortgage broker, who has a vested interest in making sure you are successful in purchasing your new home.
Even though today's market prices seem right, if you honestly answer any of these questions with an "I don't know" or you get the uneasy feeling that this might not be the best move, think seriously about reconsidering this major financial commitment. Renting for one more year isn't going to make or break you and just might be the best choice. If you get through all these questions and still feel like you're good to go, then go for it!
by: Zane Rosenbloom
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