Location, location, location. That’s the mantra for buying property. But there is so much more to consider when purchasing property especially for first time buyers not the least of which is the security and safety aspect.
Walking around the area of your desired home helps you notice things that you won’t otherwise see online or in an ad. Look for sights and smells that you can only see in person and ask yourself if you see yourself living here in the future.
Here are some key considerations when considering a new home purchase.
Location, Location, Location
I had to explain this one to my young daughters who are in grade school. When we looked for a new house, they found it hard to understand how some “cool” looking big houses could be cheaper than smaller houses in nicer areas. Other than the obvious points about finding a neighborhood with low crime, that is safe, is walkable to retail, has schools and things of that nature, location can also be house-specific.
What is the actual location of the house? Not everyone likes a corner lot. Is the house a single detached home in among semis or townhouses? That can have an impact on resale. Is the house across the road from a school or retail? Is there a bus stop right outside your door meaning people may be loitering? All these things add up.
Take A Walk And Have A Whiff
While going on Google Earth is a good start, walking in the area on foot is better. Try at different times of the day too to see how busy traffic gets.
Look around at the other houses. Look at how well they’re kept and maintained. Is it an old run down area or are house nicely kept? Walk 2 – 3 streets over and see how the houses change in terms of upkeep if at all. In the area we lived in, about 5 years after we moved there, we noticed that the street that we had to drive through to get to our house had houses that were looking a bit worn. And one street over from that? The houses were worse. We sold that house a few years later and bought a brand new one.
Taking a walk around on foot also lets you have a smell of the air. Better to find out now about the farmhouse or factory a few blocks away that gives off a strong smell every night when the wind picks up than after you bought a house, right?
House Design
Once you identify a house you like, quickly online search the neighborhood and check other homes to see what the other homes in the area typically feature. If your desired house has 3 bedrooms but most other houses have 4 or 5, that could be an issue in the future when selling.
Also keep an eye on the number of garages each home has, the square footage and other things that could negatively affect resale.
Outside The House
I have a friend – a part time real estate agent – who says he’d never buy a house on the same side as the sidewalk. If you don’t want people walking outside in front of your house like him, you may try to avoid a house with the sidewalk on your side if possible.
Is there a fire hydrant on the front lawn? Obviously it’d be handy if you ever have a fire but otherwise you’re stuck with this eyesore on your front lawn. Some people have electrical or cable boxes stuck there too.
Security Concerns
It isn’t difficult to search online and figure out where the highest crime rates are. You can drill down to specific neighborhoods in many cases to see if the area you’re thinking about moving to has a crime problem. You can Google the street name and even the address and see what pops up.
Walk around the neighborhood and talk to residents and get their opinion on the area. Sure, they might be biased but then again they might be honest too. And if it seems that many homes are up for sale in the area, you’ll probably want to do some digging to see why. And since most people don’t own a security alarm (most studies say it’s under 25% of homes that have one), if you see more signs for security-protected homes than you might expect, that could be a red flag too.
You can also search local crime stats through county records, check Facebook, Twitter and other sources to see what pops up. You can also search crime stat websites such as areavibes
, Family Watchdog, and Crime Reports for help.
Mortgage Perks
Shop around for financing and learn about the benefits each lender offers. Always think about the future and try to predict it as best you can. Even if you don’t have much extra cash lying around now, you don’t want to ignore that fact that you may in the future. Mortgage lenders usually offer you prepayment options that enable you to prepay a certain amount of the original principal every year – maybe 5% – without penalty. So if your mortgage was originally $500,000 and you can prepay 5% each year over and above what you currently pay back each month, that’s $25,000 that you could pay off each year if you choose with no penalty.
So if you win $50,000 in the lottery, you could pay $25K this year and another $25K next year and reduce your mortgage by $50K on top of your normal regular payments. Or if you get a raise and get an extra $10K per year, you can use the proceeds towards the $25K limit, too. That saves you interest in the long run and pays down the mortgage quicker.
Mortgage Tricks
Be very careful about offers like cash back mortgages and things of that nature. Cash back mortgages usually give you just that – cash back at the start of the mortgage – but it typically means you pay a higher interest rate and may also lose perks like the ones mentioned above.
If it sounds too good to be true, it probably is. Banks make money by keeping money not by giving it to you.
First Time Buyer Perks
Banks often offer qualified first time home buyers special discounts and incentives when getting their first mortgage. Perks include down payment assistance, low interest rate loans, federal tax credits and more. Read the fine print and make sure you aren’t getting something in exchange for paying more for something else though.
Note: Some programs are more lenient than others so shop around. Some “first time buyer” programs don’t actually require you to be a first time buyer. You might qualify if you haven’t bought a home in the past 3 or 5 years for example.
Home Buyer Rebate
In some states and in competitive markets, a Home Buyer Rebate may be offered by some real estate companies to buyers. How does it work? You make an arrangement with your real estate agent before purchase that they will pay you a percentage of the commission they get paid on the sales of the home you buy. The seller of the home pays the real estate commission but the Home Buyer Rebate sees a certain amount of that commission effectively paid to you, reducing the cost you paid on the home.
How much is the rebate? Perhaps it’s a dollar amount like $1,000 for a home that cost over $150,000 or 1% of the commission for a home costing $500,000 or more. It can result in several thousand dollars in savings for you.
Home Buyer Rebates are available in 40 states currently but are not allowed in Oregon, Iowa, Missouri, Kansas, Oklahoma, Alaska, Tennessee, Mississippi, Alabama, and Louisiana.
Tips On Buying A Home For The First Time
Don’t ignore Location, Location, Location: Concentrate on the house itself but pay close attention to the location and neighborhood as much if not more.
Don’t buy too much house: Buying a house that is too big or too expensive. Not only does your mortgage cost more, a bigger house is more expensive to insure, to heat in the winter, cool in the summer and takes more time to clean and maintain.
Don’t ignore red flags: As mentioned above, walking around a neighborhood is a great way to see, feel, notice, and smell the area. You really get a sense as to what the neighborhood looks like.
Don’t fall in love with a house….before doing your due diligence including checking area crime stats. They are easy to find online for free these days using many different sources including several mentioned above.