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Once you decide that you’re financially ready to buy a home, the tricky part is finding the ideal property to call your own. In the course of your home search, you may come across a number of options that seem viable initially, but less so when you put more thought into it.
1. Can I afford this house?
Try as you might to find a house that’s listed below a certain dollar amount, you may fall in love with a home that’s just outside the top end of your price range. Or you might find a home with a lower purchase price, but the property taxes make it a more expensive prospect. Before you commit to buying a house, understand the exact cost of owning it and figure out whether you can swing it financially.
Remember, your mortgage payment and property taxes are only part of the equation. You’ll also need to account for expenses like homeowners insurance and maintenance. If, for example, you’re drawn to a home with a huge yard and a built-in swimming pool, you could end up paying a lot more for upkeep.
Look at the big picture. That also means you don’t have to write off a house that costs $5,000 more than you wanted to pay if its taxes are lower than you expected.
2. Is this house in a desirable (or potentially desirable) neighborhood?
Even if you’re planning to live in your new house for the foreseeable future, there may come a point when you decide to move (or you have to move). The last thing you want is to struggle finding a buyer. That’s why it’s important to buy in the right neighborhood or one that's on its way there.
In fact, in some cases, it pays to purchase a house in an up-and-coming neighborhood rather than an established one since you might snag a more affordable property in the process. But you don’t want to buy a house where home prices have steadily declined over the years.
3. Does the neighborhood work for me?
You might find a house you love in a trendy neighborhood with plenty of restaurants, galleries, and shops. But if you have young kids, you probably need a solid school system more than anything else.
Remember, just because a neighborhood is desirable from a home resale perspective doesn’t mean it’s the right place for you to live. Dig deeply before making an offer on a house in an area you’re not intimately familiar with.
4. Can I address this house's flaws affordably?
In the course of your home search, you may be inclined to buy a fixer-upper because of the savings involved. But make sure you don’t get in over your head. If the house you’re looking at needs a lot of work, you may find that you’re better off buying a more expensive home that’s in better shape to begin with.
The best way to predict expenses is to get quotes from contractors. Even without seeing the place, an experienced kitchen remodeling company should be able to give you a ballpark estimate for gutting a 300-square-foot space and installing brand new flooring, countertops, cabinetry, and appliances.
5. Am I settling for things that can never be fixed?
In the course of buying a home, you may find that you can't check every single item off your wish list. For example, you might spot a home with updated bathrooms and a finished basement, but without the open floor plan you want. It’s okay to settle for a home that has some flaws, but make sure you can address those shortcomings in the future.
For example, an outdated kitchen can be remodeled and laminate flooring can be replaced with hardwood. You can even tear down walls, to some degree, if you want a more open space. But you can’t turn a house with a small backyard into a house with a large yard, nor can you score your desired basement game room if the home in question doesn't, in fact, have a basement. Before you settle for a house that’s not perfect, make sure the problems in question are fixable at some point in time. Otherwise, you may come to regret the decision to buy.
Buying a house isn’t something you do every year (in most cases), so it’s crucial to get it right. Answer these key questions, and with any luck, you’ll make a good decision.
11% of the mega-wealthy swear by this investment…
The richest in the world have made their fortunes in many ways, but there is one common thread for many of them: They made real estate a core part of their investment strategy. Of all the ways the ultra-rich made their fortunes, real estate outpaced every other method 3 to 1.
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