The Smart First-Time Home Buyer's Guide (2015)
Important home Buying tips
Buying a home is one of the biggest investments you can make. Therefore, it should be done in a strategic and informed manner so as to minimize the risks. This chapter is full of useful tips that will make your purchasing decision easier and help you make an educated and informed purchase.
Looking at budget (own or rent)
What you can afford:
Can you afford to buy a house? Are you better off renting a property?
These questions should be at the top of your list when thinking about moving into a new place. Remember to consult with real estate experts as well as financial analysts. You would not want to buy just before a possible bust in housing prices or at the peak of a boom.
Also, if you are not sure that you can stay in the house for at least the medium run then buying a property is not the right idea. It is much better to rent. If you really want to buy the house then carefully evaluate your future plans, keeping in mind both your family and career.
The next thing to consider is whether you have the finances to pay off the mortgage cost. Also, can you handle all the additional costs associated with purchasing a house?
Make sure to make some financial considerations before purchasing a house. The following tips are very useful;
Evaluate your credit history and pay off any outstanding debt. This will get you much better terms for a mortgage loan.
Aim for a house you can easily afford by looking at your sources of income.
Get professional financial help. Although you will find a lot of cost calculators on the internet, you are better off consulting a financial expert if you are not sure.
Be sure to consider additional costs. You might incur a lot of hidden charges so be prepared.
Location
The location of your house matters a great deal. It determines much more than what kind of weather you will experience and what kind of neighbors you will have. It will end up affecting your standard of living and quality of life much more than you could ever imagine. Tips for the best location are;
Look to buy your home in a safe neighbourhood. A house should be your sanctuary, so make safety a prime priority before buying a house. Make sure to look at detailed crime statistics of the area before making a purchase. The money you try to save by buying a house in an unsafe neighbourhood can cost you your life or that of a loved one. Set your priorities straight and buy a house in a safe location.
For those who have children, look for areas that have access to top quality schooling. A child’s education should not be compromised in any way.
Look for convenient access to places of entertainment such as malls, cinemas, restaurants and parks. The more these facilities are nearby, the better quality of life you will be able to enjoy.
Selecting a location with a great view makes a home all the more worth living in. Imagine waking to the view of snow filled mountains or the cool sea breeze blowing through your hair.
The access to public transit is crucial. Those of you who have jobs that are far away will highly desire easy access to public transit. Apart from that, an easy access to public transport makes everything more convenient.
Easy access to local fire, police and rescue facilities: Be certain to buy a house that has coverage of all these facilities, but never one that is too close. Just imagine living next to a fire station. The noise would make your life miserable.
Better access to health care is a must when looking for a location to buy a house in. After all, there is no telling when disaster might strike and proximity to a health care facility means the difference between life and death.
Inspection
A proper house inspection will not only make your living easier, but also increase the durability of your house and its resale price. Tips on getting the right inspection are;
Be sure to pick a qualified inspector.
Have the structural elements inspected. These include the walls, building and foundations.
Have the exterior evaluated. This includes paint, landscaping, drainage and passage ways.
Be sure to have the roof and attic checked. These are usually the problem areas.
The plumbing should be top on the inspection list. Faulty plumbing is a major loss.
The heating and cooling systems should be in top working order.
All the sockets and lighting should be in working condition. The electrical wiring should be in perfect order. You never want faulty wiring to cause major damage.
If your house has a garage, it should be inspected as it is often ignored in terms of repairs.
Home requirements
An important tip when buying a house is to look for one that fulfills your requirements. Your personal requirements are what make your house your home. They are the individual components that will mold your house according to your individual needs. It is often an ignored fact, but before buying a house, you should always take some time to analyze your current needs and the needs that will arise in the future. This way you could look for a house that will be according to what you desire rather than you having to settle for what you get.
Pre plan the amount of bedrooms that will be needed in the house. If you’re expecting more children in the future, then plan accordingly. An extra guest room should be on top of the list for those people that have constant visits from friends and family. It is better to pre plan, select a house that gives you the bedroom options you desire rather than having to add a bedroom later. That will surely prove to be a rather costly exercise.
A house that is old gives an elegant look and feel. For some people, a traditional looking house is a factor that is highly desirable in the modern. On the other hand, there are those people who have t embraced the new technology and enjoy the modern lifestyle revolution. Try to understand which of these people you are and select your house accordingly. Don’t end up buying a thick walled old house and then wonder why the WIFI signals are so weak.
The bathroom needs are different for different families. If you have more than one child, we suggest you look for a house that has multiple bathrooms. The queue in the morning outside a bathroom could be one of the most annoying feelings in the world. Then there’s the little matter of the bathroom design. If you are into the eco-friendly lifestyle, look for houses with plumbing that is efficient before-hand. Changing the whole plumbing could prove to be an expensive exercise.
For some people, outdoor activities are highly desirable. Playing with your pets, catching practice with your kids or just relaxing on the old hammock are all activities that require a decent sized garden. After buying a house, converting an already built piece of land into a garden will prove to be expensive. Also garage space, parking space and pool requirements should be taken into consideration.
Understanding the monthly costs
The costs of your house are way more than just the price of the property you buy. There are a lot of other costs that need to be understood in order for you to get a true idea of the actual amount of money you will be spending. A lack of knowledge of these costs has led many consumers astray in the past and it is pivotal that you have an understanding of the monthly costs that you will have to incur for years after making that initial purchase.
The mortgage payments, that you have to pay monthly, will have to be looked at carefully. It will depend on the amount of initial principle you pay and the subsequent interest rate the bank sets on them. It is better to consult a financial analyst and get the present value of all future payments calculated so you get an idea of the eventual cost of that house .This will be higher than the principle amount that the real estate agent tells you.
Taxes are something that vary from state to state and region to region. The only taxes you will pay will not be housing tax. As housing tax will be the principle tax you pay, do look into detail on which tax bracket your house will fall into and how much that will cost you. It is imperative that you look into the taxing structure to see if there are any cutbacks that you can avail. Then the local and municipal taxes come into play. Living in very expensive localities will often be paired with paying higher taxes for municipal services. Be sure that those taxes are worth your while.
Insurance costs will end up costing you a lot. First, there is title insurance. Be sure to look at the terms and conditions of the title insurance you purchase so that you don’t end up believing that you have something covered when it actually isn’t. Housing insurance in your neighborhood should be purchased after conducting a comparative analysis, so you don’t pay more than the market average.
Don't forget about the monthly maintenance fee if you are planing to live in a townhouse or a condo. Also, Regular fix-up costs are monthly costs that are often ignored when buying a house. Depending on the condition of the house you’re purchasing, the inspection report, the climatic conditions and your neighborhood’s proximity to places of public gathering, you will incur regular fix-up costs.
Living in a locality where there is a lot of snowfall or on beach-side with a lot of moisture will cause damage to your house - all the way from your plumbing to your driveway. Living in areas which are close to public places will eventually cost you miscellaneous repairs. If you have damaged or faulty areas in your house, they will also have to be maintained regularly and might cost you a significant chunk of money.
In the end, the monthly costs should be calculated carefully beforehand so that later on you do not feel the sudden financial pressures of these imminent payments.
Picking the right realtor
Choosing the right realtor might mean the difference between buying a house that you will adore Vs one that you may despise. Getting the best deal possible is dependent on getting the realtor that best fits your requirements. The following are some tips to help you find that perfect realtor:
Meet the agent out in the field and not in their office. This will give you an idea of their quality.
You must have an agent that has closed a lot of deals. That shows experience. An agent that has experience will never hesitate to knock on doors for you and get you the best deal. He or She will have the knowhow and understanding of the market and have more contacts in the field.
A great tip to meeting agents is to attend open houses. Regardless of the fact that whether you are interested in buying that particular property, attend the open house so that you can meet the best agents there. This will help you further down the road when you want to make your dream purchase.
Referrals from the people you know and love is a great way to get a good agent. After all the people who care for you will never lead you astray and guide you to an agent that they themselves had an excellent experience with.
Make sure you get an agent that has moved into the 21st century. Having a tech savvy agent that is able to text, use email and has a website is crucial to getting the best deal. Most of today’s real-estate dealings take place online and on the go. An agent that is not current with the latest trends is sure to lag behind.
Never settle to an agent on first sight. Do your research. Search and interview as many candidates as possible. This will give you an idea of their quality by comparative analysis. Look at the agreement and read it carefully before signing it. Build a trust with the agent- after all it’s your future home which is at stake.
Look for agents that can give personal time and attention. If an agent is too busy, you might not a good enough deal.
Look for an agent that has the requisite knowledge. A good salesman with all the sales tips and clichés would be worth nothing if he doesn’t have the right knowledge. Ask your agent the things you have learned about. If your agent cannot give you satisfactory answers, move on to another agent.
A well respected agent is a must. If he has a good reputation in the market than it is due to hard work and delivering good deals time and time again. Those agents that cannot deliver will not be that well respected in the market.
Look for agents that live in and near the locality. These agents will then have the right knowledge on all aspects of the area. Agents who are new to the areas of your interest will not be the best option.
A good agent should go beyond just getting you a house. He should be able to guide you about mortgage brokers, loan officers, financial analysts and inspectors. All of these references will count in the whole buying process.
Make sure the agent you hire does this job full time. A part time agent might have other things on his plate.
A good agent should have no issues about giving you frequent updates about the transaction
As you are going to be buying a house, it is best if you work with seasoned buying agents. They will have your interests as a buyer in their minds and help you in the best possible way. Seller’s agents will always benefit the seller.
Looking at the resale value
Choosing a home is much more than just a purchase, it is an investment. To make sure you make the right investment, you have to purchase a property with one eye on the resale value. Since buying a home is a substantial purchase, you have to be sure that you don’t end up losing money.
There are some key tips on making sure that your home will have a good resale value:
Be sure to buy in an area which has had constant prices. Neighborhoods that have experienced booms or busts tend to lose your money, but those which have seen their prices remain stable over a number of years tend to be the better option.
Buy your house in an area that has a low crime rate. Be careful and look at the detailed crime statistics. Keep in mind that the biggest devaluation can often be brought about by high crime rate areas.
Be sure to have the house inspected for problems and have them fixed before selling, so that you can command a higher price.
Buy homes close to large development projects. This will likely increase the price of land over the next few years and will end up making you a substantial profit.
Buy a home with more than two bedrooms. This will increase the buyers’ market for the house in the future. Many couples need a guest room and an office so more space will tend to sell better.
A home with more than one bathroom will get you much better resale. A home without a master bath will tend to sell for less.
Buy a home that has family space. Family space could be anything from a good sized lounge to a decent sized balcony where people can gather to socialize. This is an attractive resale point.
A house with good storage space nowadays will get you much better resale. Although we live in a time where less is more, you will be surprised at how much stuff people collect these days. Everything from the size of wardrobes to the storage rooms is increasing. Be mindful of that when purchasing a home.
A garage is desirable for good resale. Even if you are looking to buy a house that has no garage, having one nonetheless will give you good resale. A garage can be used for multiple purposes and is highly desirable.
That the layout of the house is structured ergonomically and efficiently is a great advantage to have when reselling the house. Look for well-designed efficient house as they will never go out of demand. Clumsily designed houses with inefficient use of space will always sell for much less.
Buying a house in a nice neighborhood that has easy access to public transport, leisure, entertainment, schooling and recreational activities will increase its resale value. Avoid economically depressed neighborhoods where people are not taking care of their houses and there is a lot of clutter on the streets.
Conclusion
In order for a piece of real estate to be considered a house, you must feel at home in it. Buying a house is a substantial investment, so it is vital that you think before the purchase and make the purchase decision according to your priorities.
Take care in following the guidance and tips given in this book , as ultimately they will lead you to buying a home that is more suitable to your needs and that will give you value for your money. Remember that buying the right home will not only guarantee a good return on your investment in terms of resale value, but it will also give you a better future. So buying the house with the right characteristics is the key message of this book.
The home style will determine the primary layout of the house and you should keep that in mind whilst making a purchase. Go for the style that best suits your needs. If you don’t like stairways, buy a ranch style house. If you’re looking for something elegant and spacious, a colonial home is what you’d like. There are many home styles and all have their distinct characteristics so be sure to understand what they represent before making the purchase.
The house should provide a comfortable space for its occupants. There is no universal standard for the amount of square footage that will give you a comfortable living space. Be sure to take into consideration the amount of people that are going to live and their space needs.
The location of the house is perhaps one of the most important decisions whilst buying a house. The location will not only determine your lifestyle choices, but it will also determine the nearby access to amenities and entertainment. The climate of the locality and conversely your clothing choices all will be determined by location. Be sure to choose a location that is safe from both natural hazards and crime. A house is supposed to be a sanctuary; if you don’t feel safe in your own house then that would be a shame.
You have to decide on whether to live in the city amidst the hustle and bustle and pollution or quietly in the countryside. A middle ground is provided by the sub-urban lifestyle. This decision will impact the property prices, the insurance costs and the cost of living. Everything from transportation, education and entertainment will be governed by this choice. Be sure to pick wisely.
Whilst looking for houses, stay away from industrial areas and commercial centers. The noise from such areas might affect your sleep patterns .Always try and find a place that is nestled in a well-connected residential area.
Your budget should be the key factor in determining your housing choice. Do not fall into the trap of overspending on your house by taking out large loans or mortgages. If you cannot afford a house try and rent one. The 2007 housing crisis has shown us that the markets are volatile and the bubble can burst. So be cautious of your earning and make your investment wisely.
The housing decision should also revolve around the proximity to your friends and family. Try and incorporate their locations when making a decision. More importantly, remember that there are going to be people living with you. What are their needs, wants and desires? You have to consider them when making a purchase.
The mortgage rates are often riddled with hidden charges and costs that you might not understand. Before making a mortgage agreement, search the market for comparable deals. Look to get the lowest interest rate but be mindful of rates that seem too good to be true. Scams are also out there so you have to be vigilant and its best if you contact a financial expert when making this decision.
The costs of rent, mortgage or taxes aren’t the only cost of living associated with the house as is popularly believed. You have to be mindful of all the extended cost of living that will be associated with the location you select. The transport cost, the cost of local utilities, the general prices of the local entertainment and leisure activities are also to be looked at. The lifestyle of the neighborhood and how much it will cost you to be part of that will have to be duly calculated.
The local schools and colleges are a very important consideration. If you have young children, then the quality of the public school system should be top priority. For older children the quality of colleges and proximity to top colleges is a major plus point.
The personal priorities and choices are not to be ignored. After all, it’s your house so it should be according to your taste. It is you who decides on whether to go for a modern or a traditional house. You decide on the floors, bathrooms, kitchen design and design of the interior. Make sure you choose what appeals to you rather than what is suggested by the designers.
The most crucial aspect that this book reiterates is the importance of having a proper inspection. Be sure to choose a certified inspector, be present at the inspection and listen and follow up on the inspection results. Whether you’re buying a house that is new or second hand, the importance of a detailed inspection cannot be overstated.
This book will guide you towards making an educated guess and in the end, it is up to you to make the final decision. Choose a home that is according to your needs, the neighborhood that best suits you and the payment method that is easily affordable.
Thank you for reading “The Smart First-Time Home Buyer's Guide”. I wish you the best on finding your dream home and have a wonderful first-time homeowner experience.