Check Out Transportation
Don’t let the temptation of the "perfect" house lure you into ignoring the way its location will affect your commute. Whether you commute by car, on foot, or by bicycle, make test runs to and from work during your regular commuting hours so you have a good idea of what you’ll be facing. Also scope out the parking situation. Will you have to park a block away and get stuck lugging heavy bags of groceries every time you shop? Once you factor in any transportation hassles, that charming house may seem a lot less charming.
Insist on a Survey
Without a survey to determine property lines, you could find out after you move in that part of what you thought was your yard is actually your neighbor’s. Visual borders, such as fences and hedges, are not reliable for determining where one property ends and another begins. For a small fee (usually around $200), you can have a city surveyor come out and locate the property pins. If you need a more extensive survey—if, say, you're buying several acres—it can run a few hundred dollars more, but it’s essential to have it done so you know exactly what you’re buying.
Big houses are enthralling; they offer vast living spaces, and it’s easy to get swept up imagining how you could put all that room to use. But large homes not only come with bigger price tags, they also cost more to heat and cool and, because county assessors take square footage into account, they have higher property taxes. Do you really need that fourth garage stall or room for a home gym? If the answer is no, look for a more moderately sized home.
While you might not need a McMansion, don’t sell yourself short. If you plan on this house being your forever home, you need to be able to grow into it. Sure, the kids can share a room right now, but what about in a few years? Is there space for entertaining if you like having company over? If you have doubts about the size of the house without any of your stuff in it, chances are it will feel even more cramped once you move everything in.
Think with Your Head, Not Your Heart
Before you start house-hunting, decide what factors in a new home are most important to you. Do you want to live in a specific school district or near your place of employment? Perhaps you need a house with at least three bedrooms, or you want a large garage so you can have a workshop. Determine your needs, and don't let the sight of a super-charming home derail them. It’s easy to fall in love with a house, but if it doesn’t meet your most important criteria, move on.
Consider All Costs
First-time home buyers often focus on the amount of their potential mortgage payment and forget to factor in the additional costs of homeownership. Nothing will sour you on your new home more quickly than finding out that living in it costs a lot more than you thought it would. Before you sign on the dotted line, find out how much you’ll be paying in property taxes and utilities, and figure out what a homeowners insurance policy will run. Budget in extra money for maintenance, home repairs and homeowners association (HOA) dues, if applicable.
Related: 18 Hidden Costs of Moving
Find Out Everything You Can About the Neighborhood
Even if you believe you've just found your dream home, research the neighborhood. What school will your children be attending? How far is it to a grocery store? Are the other homes in the neighborhood in good shape? Visit with local law enforcement and find out what the crime rate is in the neighborhood. You'll probably be living there for a good long time, so you'll want to be sure that you like the neighborhood as much as you love the house.
Know Your DIY Limits
Buying a home that needs a little TLC can be a good investment, particularly if you do the work yourself. Before you start making offers, though, be aware that if you have to hire pros to get the work done, you may end up paying more for renovations than the house is worth. Even if you have the DIY chops to tackle major remodeling projects, the local building authority might require that some parts of the project be done by pros (wiring, HVAC, and plumbing, for example). Your best bet is to get free estimates from contractors before you buy so you’ll know what the work will cost if you can’t do it all yourself.
Don’t Make Major Purchases After You Start House-Hunting
Most buyers get preapproved by a mortgage company before they start looking at houses, and their lenders tell them exactly how much they can afford to spend on a house. The lender determines that amount by comparing the buyer’s income and expenses. If you take on more debt, however, the amount you can afford to spend on the house will drop. If, for instance, you buy a new sports car before you close on a house contract, the additional monthly payment for that new car could disqualify you from the mortgage, even after preapproval, and you could lose the house you wanted.
Contract with a Buyer’s Agent
The world of real estate can be confusing to first-time home buyers, so it pays to have someone in your corner who’s looking out for you. For this reason, consider hiring a buyer's agent, a real estate agent who specializes in representing only buyers, not sellers. A buyer’s agent works on commission, getting paid only when you close on a house. Her job is to protect your interests throughout the real estate process. She handles important details like scheduling surveys and inspections, and she'll work with your lender and the seller’s agent to solve problems.
Insist on an Inspection
If you buy a home listed with a real estate brokerage, the listing contract will usually specify that an inspection be done after your financing is approved. If you’re buying a for-sale-by-owner house (FSBO), however, an inspection may not be part of the contract. Nevertheless, insist on one—even if you have to pay for it—before you commit. For about $300, you can have a professional inspector examine every part of the house, including appliances, wiring, and HVAC, so you won’t end up dealing with unexpected repairs after you move in.
Stick to Your Budget
It can be tempting to go over your planned budget for that “dream house,” but you created that budget for a reason. As a homeowner there will be many unexpected costs in your future, you don’t want to spend all your savings to own a house that you are unable to afford to maintain. Plus, you’ll never be able to enjoy the place if it becomes the reason you have to miss out on trips, concerts, and other fun events.
Tune Others Out
When you’re buying a house friends, family, your real estate agent, and even strangers will want to share their advice and opinions. Sure, some of it will be useful, but when it comes down to picking the right house your own opinion is the one that matters most. Mom and dad might have comments about the location, your best friend might not like the cabinet colors, but at the end of the day you will be the one living there. Choose the house that meets all of your needs and wants, not theirs.
Your home is most likely your largest investment. Home insurance is a valuable way to protect the investment, but could you save money on your home insurance policy? Read our top tips for how to safeguard your property while saving money.