First time home buyers often have great plans to do things the right way but then get caught in the trap of paying too much attention to minor details and ignoring the important stuff. Especially when you find that perfect house that you just have to buy.
When buying a home you should visit it on several occasions at different times of the day to fully observe the house and neighborhood to get a full perspective on what you’d be buying. This also helps you view traffic in the area to see how busy it is.
What to look for when buying a new house
Buying a new home isn’t something most people do more than several times in their lifetime, if that. It’s difficult to take learning points into your next house purchase because it may not occur for years and by the time it happens, you’ve forgotten the mistake(s) you made the last time you bought.
Location, location, location. The old standby cliche that is totally true. The location of the home is the single most important aspect. If you have the nicest house in a crappy neighborhood, you’re much worse off than having the worst house in a great neighborhood. However costly it might be to improve a crummy house in a nice area, it’s much cheaper and more likely than thinking you can improve an entire neighborhood yourself. You can’t.
The right price. Don’t forget about costs that you’re going to have to cover as part of the home purchase. Legal costs. Land transfer. Property taxes. Utilities. Other cost to furnish your new home and do repairs. It adds up. And if you like to travel or buy a new car every few years, ensure you have enough left over for that otherwise you’ll have to adjust your lifestyle or get a better paying job. Always budget for extra costs and be liberal with the amounts you project. You don’t want to become house poor.
The right size. Don’t buy more house than you need. A bigger house costs more to buy, heat, insure and maintain. And there is more to clean and eventually replace, too.
Don’t bite off more than you can chew. Not everyone is handy and not everyone has the time to buy a fixer upper. Don’t overestimate your ability to turn an old outdated home into a modern masterpiece. It can be costly and time-consuming and unless you have a specific skill to do it yourself, you’ll have to pay someone to renovate.
Not all renos are the same. If your desired home needs a new bathroom, you might have another bathroom(s) to use while it’s being renovated. But if your desired home needs a completely new kitchen, you might go weeks or longer without one. Think about that before buying a home that needs a lot of work.
Don’t ignore the less obvious. People look at the paint, cabinets, appliances, carpets and things of that nature. These are big items to be sure but these can be updated and improved upon over time. But what about the windows? The roof? Windows can be expensive to replace but if they’re out of date and past their lifespan, you might need to spend thousands to replace them before they become a problem.
Look and smell. Look at the ceilings for water damage or recently painted areas that look like they’re hiding water damage. Walk around the basement and smell for mold and mustiness. Also look at the basement floor around the corners of the walls for signs of leaks or water seepage. White chalkiness on the walls of an unfinished concrete basement wall may indicate dried water that has seeped in perhaps after heavy rain.
Look closely at details. Also look around closely at finishings, paint jobs, woodwork and things of that nature. It’s not uncommon for homeowners to DIY stuff before putting a home up for sale and some take shortcuts. Look for quality of workmanship. Check out the brand names of appliances in the kitchen to see if they went cheap. Check to see how clean or grubby the house is. Flush a toilet and run water to check the water pressure. Details matter.
What should you not do before buying a house?
Before buying a house, there are things you should avoid doing especially if you’re financing the purchase and need a mortgage.
Don’t switch jobs if you can avoid it. My wife switched jobs shortly before buying her first condo – it was a better, higher paying job so it made sense – but several banks questioned why she had switched jobs and turned her down for a loan as a result. Stability at a job has benefits, certainly from a bank’s perspective.
Don’t rack up other debts. Don’t lease or finance a car or make any big purchases on credit before buying a home. Don’t open a new line of credit. Banks want to see you with less debt to other people if they’re going to lend you money, not more. While you’re at it, don’t sign up for another cellphone contract just in case as that’s a debt that will be added to your score.
Don’t miss bill payments. In other words, don’t disrupt your credit score or make it look like you have trouble paying your bills.
Don’t forget to shop around for a mortgage. Don’t just go to your regular bank and accept what they offer and be done with it. While you might end up going with your bank in the end, check with a mortgage broker and they can shop around on your behalf to find the best rates and options for you. It can (literally) save you thousands in the long run.
Don’t forget to trust your gut. As hard as it is to do, don’t fall in love with a home and believe that you have to have it even if it means going way over budget and possibly paying more than what it’s worth. A home is the biggest purchase you’ll make, so don’t go overboard and regret your decision.
Don’t buy based on what your bank will lend you. Buy based on what you can afford. Just because your bank wants to lend you $250,000 doesn’t mean you should take it if you projected that you can only really afford to pay back $175,000. You decide what you can afford, not the banks, not your family and not your real estate agent.
Things to do before you buy a house
Visit the house several times even during the same day if needed to check traffic, see the neighbors and observe the area at different times. Going during the day lets you observe everything when it’s light but if the neighborhood (or unit if it’s an apartment/condo) is loud at night, you’ll find out.
Do an inventory check. Check the taps, lights, electrical outlets (count them to ensure there are enough), lift up carpets, look for signs of water damage, make a note of smells like mold, rotten wood or wall cracks. Better to find out now about a big problem before you buy.
Pay attention to exposure. When you visit the house during the day, try to go when there is sun to see how much natural light enters the house and from which side(s).
Check the neighbors. Look for the type and condition of their cars. Check the state of their houses. Is there anything to suggest you might have a problem living next door to these people? Also check the streets around the house, a block or so away. My wife and I noticed several years after buying our first house that the surrounding area was the first to go downhill as the houses were cheaper and older.
Consider the resale potential. The first house my wife and I bought had a great saltwater pool and finished basement. Only 3 bedrooms though, and surrounding homes had 4. We were ok with this given the great pool and basement but upon selling the house 8 years later, we got feedback from some potential buyers about the lack of a fourth bedroom which was a problem for some people.
Know what you’re buying. Ensure you understand exactly what appliances, fixtures, etc come with the house. Sometimes sellers might have a sentimental item you expect to stay with the house that goes with them.
Pay for a home inspector. Don’t skip out on this one even if the home looks in good shape. An inspector that can check the roof, foundation, electrical, plumbing and more can save you from buying a money pit.