I didn’t ask enough questions when we bought our first house. It all turned out better than to be expected, but if I were to buy a house again today, I would do a number of things differently. Namely, I would be a lot more diligent. Not only is a house a big financial purchase, but it’s where you live. It’s something you own and have to maintain.
What doesn’t being diligent and doing your homework look like, though? Here are a few things to keep in mind:
Get clear on what you want.
A house is a big purchase, not something to rush into. Take the time to get clear on your non-negotiables and your nice-to-haves. Don’t just think about today, try to think at least 5-10 years in the future. Is there a certain school district you need to be in? A certain number of bedrooms? A backyard? Do you need a single-level home or certain amenities on the first level for accessibility reasons?
Assess what your motivation is for buying. What is your why? It’s always worth asking if you would be better served by renting for now or for the long-term.
Determine your budget.
Your realtor and mortgage broker have a conflict of interest; they make more money the more expensive the house you buy. Going in with a clear range of what you want to spend is essential.
Your home budget depends on what you can afford, given your current savings and income, but also on your other goals and the purchase's lifetime impact.
has a great tool that calculates and compares the total cost of home ownership on a monthly and lifetime basis. The total cost of home ownership is so much more than just the mortgage. As the saying goes, rent is the maximum you’ll pay; your mortgage is the minimum. Make sure your cost estimations include taxes, insurance, HOA if applicable, maintenance, and repairs.Shop around for loans.
Get multiple mortgage options! I cannot stress this enough. Rates and the amount of down payment required can vastly differ between mortgage brokers, banks, and loan types. It could be the difference of tens of thousands of dollars over the course of the loan. It could be the difference between getting into the house you want and not qualifying.
If the rate isn’t what you want, is there a way to negotiate? Ask if you improved your credit score; would that make a difference? If you paid down your student loans or other debt, could you get approved for a larger mortgage? How about if you saved a bigger down payment? What would a 15-year vs 30-year mortgage look like? Are there opportunities for an FHA (first-time home buyer), VA, or USDA loan? There are even physician loans for doctors and other high-income earners who have gone through years of schooling and likely have a high debt burden. Explore your options and the pros and cons of each.
Interview realtors
Don’t just use the realtor your friend used. You can start there, but you may have different needs than said friend. Finding a relator who specializes in what you need and want is worth it. Interview a few. Ask them about their price structure, what neighborhoods they are most familiar with, and what kind of homes they typically sell. How long have they been in business? Can they walk you through their process?
Don’t forget the vibes. You will be working with this person, touring homes, and doing tedious paperwork. Ideally, you want to get along with them as well as trust them.
Ask questions.
I will be the person who knocks on potential neighbors’ doors to ask questions next time I buy a house. How quiet is the neighborhood? Have you lived here for a while? Yes? Is there anything shady going on with this house?? (iykyk) Drive around at night and on different days of the week. Take a walk in your potential new neighborhood.
If you can ask the homeowners questions, do that too! How much was your average electricity bill? How is the traffic from this location to downtown?
Do the inspections!!!! In the long run, inspections will be a drop in the bucket. Is that tree going to need to be cut down? How are the pipes? How about pests?
You want a clear picture of what you are getting into, how many potential repairs are needed, and the timeline for improvements.
ADVOCATE
It’s easy to be swayed by a price or a cool feature. You might feel rushed to purchase in a hot market. Remember what your non-negotiables are and what your price range is. Advocate for yourself. Be patient in finding the right fit. Don’t be afraid to walk away from a specific home or even your decision to buy a home!
Bonus checklist: What issues should I consider when buying a home?
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