Buying a house — or just thinking about it? Before you fall in love with a large bay window or stainless-steel appliances, consider these five important questions.
Budget: Have you considered all costs?
Before you start shopping, have a clear idea of what you can spend. Check with your credit union, which can give you financial advice and pre-approve you for a loan. Consider costs beyond financing and closing—for example, the appraisal, inspection, landscaping, flood insurance, and yearly insurance. Think about expensive repairs or maintenance you might need 5, 10, or 15 years down the line. Finally, ask your Realtor to double-check the information on the property’s listing sheet to ensure you’re not surprised when tax time rolls around. The more prepared you are, the better off you’ll be.
History: Does your house have a secret?
Ask your Realtor to research all disclosures on your house before you buy. He or she can tell you about any potentially unpleasant surprises. For example: Has the property ever had a title transfer issue? Will the property require flood insurance? If the house has a noted addition, were the appropriate permits pulled? Have there been any complaints against the house’s builder?
In addition, you might ask: Does the house have (or has it ever had) termite damage, water damage, or mold? Does the electrical outlet have room for expansion? Are the walls sheet rock or plaster? How old are the appliances, and are they still under warranty? How old are the windows? Does the house have a septic or sewage system? Is the foundation porous? You might ask him or her to point out any other potential issues before you even have a home inspection.
Investment: Are you thinking long-term?
When you tour a house, look beyond the details — wallpaper, cabinet colors, the way the house has been staged — all of which can be easily changed after you purchase the home. Instead, consider longer-term factors, including the home’s location and surroundings — whether your new neighborhood and its hotels, restaurants, fitness centers and other amenities will be a good long-term investment for you and your family. If you have young children, you may want to look into the local schools, too—not just elementary, but junior and high schools as well.
Communication: How are you working with your team?
Buying a home is a major life-changing investment, and open communication with your Realtor, lawyer, loan officer, home inspector, and other professionals is a must. For example: Ask your Realtor if he or she has any creative strategies for the offer—for example, incorporating an escalator clause (i.e. one that guarantees a change in the agreement price if a certain variable is met) into the contract. Consider asking your loan officer whether you should buy points upfront to bring down the interest rate. Don’t be afraid to ask questions!
Paperwork: Do you know what you’re signing?
Carefully read through your contract and all related paperwork. Many people choose to hire a lawyer to review the documents and ensure their interests are being represented. Don’t let anyone rush you: If you have questions, see something you’re not comfortable with, or want to negotiate something, feel free to ask. Your credit union can help, too. Broker Linda Goneke says, “Pen Air is always competent in financing and mortgaging properties, of course buyers have always had great experiences working with PenAir.”
Take the time to think things through, and you’ll find a house that’s good for you and your finances.