Owning a home is a financial milestone for many people, but the process of actually buying your first house is far more complex than most major purchases. Before you even consider placing your first bid, there are a number of important factors to consider. Here are the top 25 things experts say you should consider before buying your first house.
1. Pay off your debt
If you’re still drowning in credit card debt, you probably shouldn’t be buying a home. A poor credit score will result in a higher interest rate on your mortgage, making your debt grow even faster.
2. Don’t use the listing agent
Although hiring your own real estate agent might seem like a waste of money it can actually help you save in the end. It’s in the interest of the agent representing the listing to try to sell the home for more because that’s how the agent makes his or her commission. Hiring your own real estate agent means he or she will only be looking out for your interests, not the property owner’s, as well.
3. Buy for the money you’ll make in the future
In addition to property taxes and other unexpected fees, there are a number of factors that could influence how much income you actually have to put toward your mortgage. Your finances now might qualify you for a larger mortgage than you’ll be able to pay off after you have children or change jobs.
4. Consider how your family might grow
Do you plan on having children? Will you need a yard for a future pet? Buying a two-bedroom home might be cheaper now, but it will cost you more in the long run if you end up needing a four-bedroom.
5. Think about mobility
If there’s a strong chance that a job or need to be closer to your family might result in a move in the near future, you’re probably better off renting.
6. Weigh space versus location
Having a lot of space is great, but if your commute is so long you never get to enjoy it, you might end up with buyer’s remorse. The reverse is equally true. Too much space between you and things you love, such as friends or restaurants, might make extra space in your home seem less valuable.
7. Look at the neighborhood
Your neighborhood can affect your property value, but it also affects your daily life. Would you be OK living in the city if you’re planning on having children? Would you want to have to drive over 30 minutes to a grocery store? Consider whether your dream home is worth giving up other conveniences.
8. School districts matter, even if you don’t have kids
According to researchers at Duke University, there is a correlation between the quality of a location’s school district and home value. This means even if you don’t have children, your school district will impact the value of your home.
9. Know where your property ends
Property boundaries become less clear over time. Even if you plan on being pals with your neighbors, a land survey can help you avoid future conflicts and clarify any misinformation passed on from the previous owner.
10. A great deal might not be a steal after renovations
Sure, home-makeover shows make it look easy, but fixing up your dream home could end up being more expensive than buying one that’s already perfect. Make sure to figure out how much renovations will actually cost you and whether they’re worth the stress before you settle for a fixer-upper.
11. Use flaws to your advantage
Potential repairs and renovations are a great negotiation point and could drive down the cost of the home enough that you could make repairs and save money overall.
12. Landscaping isn’t superficial
Totally redoing your lawn can be an expensive and time-consuming process, even for the master renovator. When calculating the cost of renovations versus finding another house, make sure you consider what’s outside the house, not just what’s in it.
13. Inspect, and then inspect some more
Although not every seller is out to swindle you, you should still make sure to do your own inspection. States have different regulations on what kinds of repairs are actually legal, so make sure any known damage to the house was repaired to your standards.
14. Check for quality repairs
Putting your sweat instead of money into renovations is OK if you have the know-how. Just make sure any renovations listed by the seller were actually quality work.
15. Look for past insurance claims
Even after your own inspection, it might be hard to ascertain what damage the house has actually sustained. According to Lifehacker, you can ask the seller for a Comprehensive Loss Underwriting Exchange report, which will outline every insurance claim on the house in the past few years. The report is free to request and works like a credit report for your home. Although many states require sellers to disclose past damage to the house, this is a good way to double check.
16. Invest where it counts
Despite the popular myth that houses are a guaranteed investment, U.S. News has shown that isn’t always the case, depending on your needs and the market. That said, investing in a down payment for a home still stacks up better than putting that money into the stock market. You’ll save money on a mortgage, and the risk of losing the money is much lower.
17. Check for unexpected surprises nearby
It’s impossible to predict every change that will occur in your neighborhood, but if a bar that will be open into the wee hours of the night just got approval for construction next door that might affect your decision to buy. Check with your local city or neighborhood planning office to make sure your neighborhood isn’t going to change before you even unpack.
18. Read the fine print
This is true for all parts of life but especially where there is money involved. If you’re moving into a planned community or co-op you’ll likely have to sign a homeowner’s association agreement. The agreement states you’ll pay a certain fee for the upkeep of common spaces. Check your paperwork to see what it says about how much this fee could increase over time. Otherwise, you might end up spending more than you can afford. Investopedia also recommends you make sure your house is HOA compliant before you purchase it, lest you end up with unexpected renovation costs
19. Talk to your neighbors
This might seem obvious, but your neighbors are going to give you a much better sense of the community than your real estate agent can. These are the people who are going to know how functional public services are in the community or how noisy traffic really is. Moreover, they’re the people you’re going to be stuck living next to, so it doesn’t hurt to get to know them.
20. Decide what time frame works best for your mortgage
Although Americans have traditionally opted for 30-year mortgages, recent trends suggest a 15-year mortgage could be a better fit for many buyers. A 15-year mortgage will mean higher monthly payments, but your interest rate will be much lower and save you money in the long run.
21. Get preapproved
While BankRate reports that less than 10% of homeowners get preapproved for a mortgage before shopping for a home, preapproval can be a huge boon in landing your dream house. A homeowner is much more likely to accept your bid if you can show in advance you actually have the means to finance your purchase.
22. Know what your deal breakers are
While you obviously might want to avoid a house that requires expensive repairs, everyone has his or her unique pet peeves. Is it impossible for you to live within range of a noisy airport or highway? Know where you have to draw the line — even on a great deal.
23. Follow the 20% rule
According to Business Insider, if you can’t offer at least a 20% down payment, you should reconsider buying. Putting down less increases your risk of foreclosure.
24. Don’t let small flaws turn you away
While you shouldn’t become overconfident in your renovation skills, you also shouldn’t let one bad paint job ruin a good deal. Superficial changes are often worth the cost.
25. Decide whether it’s worth waiting
Mortgage costs for first-time homebuyers have risen a quarter of a percentage point under recent action from the Trump administration, according to Time. That’s on top of mortgage prices rising across the industry. Although it’s impossible to predict the future of the housing industry, it’s important to consider the market when you’re deciding whether to buy. If things seem risky and you’re willing to wait, that’s probably the best move.