The phrase "caveat emptor" – or "let the buyer beware" is an especially important reminder for anyone who is considering buying a new home. It's can be tempting to be swept away by the first appealing home you visit, but it's important to slow down and ask a few questions about your home search and the specific property before making an impulsive decision to buy. As with every other major purchase you make, you will want to do a little research to make certain that you're getting a fair deal.
Here are a few questions to ask yourself, your real estate agent, and your lender once you decide that you want to buy a new home:
What is my budget?
Determining your home buying budget involves doing some calculations that include your income, your current debt, and how much money you can comfortably dedicate to a down payment, monthly mortgage payments, and necessities like home insurance and utilities. Go over these numbers carefully, and be sure to factor in expenses associated with the home sale itself, like lender fees and closing costs.
What do I want in a home?
Home size, location, condition, and features are all variables that will come together to determine the price of a home. Make a list of what you would like to have in a new home, including number of bedrooms and bathrooms, the type of neighborhood you desire, proximity to services, and other factors that are important to you. Think about whether you wish to buy a house that is move-in ready or whether you're willing to make some renovations or repairs. Identify which attributes are most important to you in a new home, and which qualities allow for some wiggle room when trying to find a home to fit your budget.
What kind of loan will I qualify for?
This is a question that your lender can help you answer. Partnering with a lender at the outset of the buying process can mean the difference between disappointment and success. If possible, have a loan pre-approval letter from your lender in hand before you even start shopping around. Every home loan is different, from conventional loans to VA and FHA loans, and all come with different terms and different rates. Your lender will be able to help you determine which type of loan is right for you.
Is this asking price fair?
Your real estate agent is an asset to you in many ways during the home buying process – not the least of which is his or her experience and knowledge of the industry. Based on comparable nearby properties, your agent can help you steer clear of homes that are overpriced or suspiciously underpriced, which can help you avoid making a mistake that will haunt you later.
How long has this home been on the market?
Properties that have been languishing on the market for several months – especially when the market is brisk– should be approached cautiously. Ask your agent for insight about why a house isn't selling.
Are there any hidden or concealed problems with this house that I should know about?
Real estate agents are the experts when it comes to neighborhoods, school systems, and communities. They also know warning signs about a property when they see them. Ask your agent what he or she would want to know about the house you are considering buying. Using your agent's knowledge as a guide, you can ask informed questions of the seller or listing agent that could yield useful information about a property.
Home buying is a process best approached with eyes wide open. Pairing a little self-reflection about your home needs with a bit of detective work about the home you are hoping to buy will ensure that you end up with fewer surprises in the long term.
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