The Ultimate 100 Tips For Buying a House
The process of buying a house is not easy to navigate, but these essential tips will help you can make the best decisions.
Buying When You Should Rent
Buying a house isn't always the best option. If you're not planning on staying in a home for more than a couple years, renting may be a better option. You'll also need to consider your personal finances—you may be able to afford your monthly mortgage payments but can you afford unexpected repairs such as a flooded basement or damaged roof?
Down Payment 101
The days of putting zero down are gone. At minimum, depending on your lender, you'll likely need 5 percent of the selling price as a down payment. Also, consider the fact you'll want to keep some money on hand for closing costs and for an emergency fund. If you can't put 20 percent down when buying a house, you may need to pay private mortgage insurance (PMI) so it's best to understand the down payment terms.
It Was Love at First Sight
It's important to look at a few houses so you can compare pros and cons. If you love the first home that's great, but look at multiple homes. When you look at more homes, you'll get a better understanding of your options, likes and dislikes.
Know Your DIY Limits
When it comes to buying a house that needs repairs, consider what you're willing to deal with and what you're not. Perhaps you feel comfortable purchasing a home with an old roof, but lead paint isn't an option for you. If the home needs some work, understand the costs associated with the needed repairs.
Know What You Can Live With and What You Can't
If this is your first home, consider what you can live with and what you can't. Perhaps the kitchen isn't ideal, but you know a few appliance upgrades will do the trick. You wanted two full bathrooms, but can you live with one and a half? Know your must-haves.
Buying in the Wrong Season
Judging a Book by its Cover
Jumping the Gun After One Viewing
There's a Difference Between Pre-Qualification and Pre-Approval
If you're serious about buying a home and not just trolling the market, be sure to get pre-approved by your bank or credit union BEFORE you start viewing homes. Also, be sure to obtain pre-approval instead of just pre-qualification, which is simply a preliminary letter from your bank without the official credit check, etc. With pre-approval, you will really feel ready to make an offer when a home feels right, and if there's heavy competition. You'll also know exactly what you can afford, which is really the most important thing. Learn more about buying a home for a DIYer here.
Don't Ignore Old Paint
Despite the fact that sellers are required to fill out a lead-pair disclosure form in most states, if the home you're considering was built before 1978, you should seriously consider its potential for lead-based paint. On one of your showings, take a lead-paint test kit with you to swab a few areas that seem suspicious (flaking, zebra-like chips). You can buy tests for a few bucks at your local health department. If you have time and the ability, also test the water to ensure the tap water doesn't contain lead as well. Get full instructions on how to test for lead paint here.
Don't Skip the Final Walk-Through
Most purchase agreements allow for a final walk-through of the property to ensure that the house is still in good condition. This might not seem necessary, but if you're purchasing a foreclosed property or displacing disgruntled renters, you may need to ensure that no last-minute damage was done (think writing on walls, stolen appliances, etc.).
In some communities, neighbors can make or break your home purchase. In a friendly neighbor, you can have a friend, a confidant and sometimes even a babysitter. Neighbors, if they've lived near your potential home for a few years, can also contain knowledge about previous owners or tenants and any damage they might have done. Were there ever bats in the attic? Was there lead remediation? Radon problems? Your neighbors might know all of the dirty details. So don't be afraid to get friendly, and just ask. You can still maintain your privacy in the home after purchase—check out this project on how to build a patio privacy screen.
Trying to Make it Work
Flood Determination Assessment
Credit Report Fee
Mortgage Broker Fee
State Recording Fee
Lender’s Title Insurance
Owner’s Title Insurance
The Experience of People Around You
The Size of the Home You Need
Your Loan Approval Numbers and Down Payment Options
Getting pre-approval for a loan isn't an instant lock, but it does give you a very good idea of what sort of mortgage you can handle, making this an important step. Your mortgage approval numbers will also dictate how much you need to consider for a down payment—usually around 20 percent, but that varies for some government FHA loans and individual deals made with sellers. If you find a house that is over your loan pre-approval limit or you cannot afford putting 20 percent down as cash, it's time to move on. It's vital that you stay within your means, no matter how much you fall in love with a house.
What Home Inspections Uncover
The State of the Neighborhood
The Age of Appliances
Proximity to Work and Schools
Which Way do the Windows Face
Homeowner's Association Details
State of Offers on the House
Alleviate Home-Buying Risk
Buying your first home is likely the most costly purchase you've ever made and it involves a head-spinning amount of details. Hiring an independent home inspector alleviates some of the risk for the 30-year mortgage you are assuming with the purchase of a home.
"We like to think of the home inspection as giving your home a health checkup before you plunge into the purchase agreement," said Dave Kirwin, Kirwin Group Home Inspections. "The biggest risk involved in buying a home is missing the very expensive home repairs that aren't obvious to the untrained eye."
Make a Confident First Home Purchase
Understand the ROI of the Home Inspection
Hiring a home inspector costs approximately $400 dollars. The ROI (return on investment) in hiring a home inspector is a drop in the bucket compared to the amount of dollars the buyer can save.
"We often find needed repairs costing up to $3,000 to $4,000," Kirwin said. "We recently inspected a home where one corner of the house had settled unevenly. You could feel something wasn't quite right and the room didn't feel plumb. The siding and drywall was patched to mask the cracks. The foundation corner was 4 inches lower than the rest of the house. In this case, the buyer went back to re-negotiate repairs with the seller and the home inspection ended up saving the buyer several thousand dollars." Pay attention to this tip first home buyers!
Hire the Right Home Inspector
The best way to find a good home inspector is to ask friends and family. Find out who in your personal network has had an inspection done. After talking to your personal references, do an online search of home inspectors reviews and online presence. This will relieve some stress when buying your first home.
"We think it's a good idea to interview two or three home inspectors to find out their level of experience and demeanor," Kirwin said.
Get Input from Your Realtor on Home Inspection Needs
When buying your first home talk to your Realtor about the home inspection process. Also, get input about what they think is important for the home inspector to focus on for your specific needs. The Realtor will advise you on the home inspection process. It takes three or four days to get the inspection and then a couple days to get back to the seller with the results.
"Even with the home inspection, the home seller doesn't have to make the repairs or adjust the price of the house, but the buyer then has the choice to buy the house knowing what repairs will cost or to walk away from the house," Kirwin said.
Itemize Your Inspection List: Radon, Sewer, Chimney
Itemize the list of things you want checked during your first home inspection.
"If the home buyer wants specific additional types of things inspected such as radon, sewer, or chimney, it's important to request that from the home inspector beforehand," Kirwin said.
For example, a fireplace or chimney inspection requires a camera on a cable to look into the chimney flue and a radon test requires an electronic monitor.
"If these additional inspection options aren't asked for upfront, the inspector may not be able to schedule and coordinate them for the buyer," Kirwin said.
Come Prepared: Notebook, Camera, Tape Measure
After you've hired your first home inspector, you will most likely have a lot of questions running through your head.
"Get a notebook and write down your questions as they come to you," Kirwin said. "Bring the notebook to take notes, and don't forget to take pictures."
Remember to bring a tape measure. "The tape measure is one item most home buyers forget to bring," Kirwin said.
Attend the Entire Inspection
Home buyers should plan on attending the entire inspection. However, some buyers choose to not be present during the inspection. The inspection might be three hours long, but every minute of those hours is spent absorbing new information and allowing the home buyer to look around the house.
"We think one of the most invaluable benefits of hiring a home inspector is for the buyer to learn as much about the home as possible," Kirwin said. "While we are making sure the home is structurally sound, the home buyer gets a chance to experience the house for an extended period of time without interruptions."
Wear Appropriate Clothing
A significant amount of time home inspecting is done outdoors.
"Plan on spending at least 30 minutes outside to learn everything there is to know about the home's foundation, siding, windows, landscape grading and other outdoor concerns," Kirwin said. "Wear clothing appropriate for the weather."
Remember the Most Important Goal of the Inspection
Hiring a home inspector means the inspector is looking out for the first home buyer's financial interest. The most important goal and primary purpose of hiring a home inspector is to protect your financial interest.
"We want to make sure first-time home buyers don't get bogged down in cosmetic blemishes — a loose doorknob, a scratch on the floor, a worn light switch or a squeaky hinge," Kirwin said. "These tiny things are $10 to $15 fixes. What we're looking for are the very expensive repairs that aren't obvious, such as structural problems or water damages in the basement."
For cosmetic blemishes, home buyers can check out our guide for the DIY 10 minute home repairs and maintenance.
Not Saving Enough
Not Doing Enough Research
Forgetting About Future Development
When you have a specific house in mind, think about potential developments. For example: If the home is near a busy road, will there be expansion in the near future? If there is a lot of open space around the home, will more homes be built in the area soon? If there are several homes for sale in the neighborhood, are they selling quickly and who's moving in? It may be difficult to find concrete information about future developments, but keeping some what-ifs in mind as you look can help you find your ideal home. Also, keep in mind the potential resale value of your future home because no one knows what the future holds and you may need to sell earlier than you imagined.
Learn about some of the best and worst projects to improve resale value.
Which Way do the Windows Face
The Experience of People Around You
Finding Out the Commute is Too Long
At a certain point, a commute becomes a burden. If your commute is taking valuable time away from your family or personal goals, look for a home closer to your work. It may be worth it to downsize to a smaller home instead of losing too many hours out of every workday.
Find a Realtor with Whom You Click
Location, Location, Location
One Car Garage
Don't Always Believe the Estimate of a Home Price on Zillow
Bidding War Strategy
Use Someone You Trust
Don't Be Afraid to Ask Questions
The reason you hired a home inspector is because this person has the necessary knowledge to evaluate whether or not this potential property has any issues that would make purchasing the home a bad decision. And you should respect your home inspector's knowledge and time. However, if something doesn't look right or you don't understand what a home inspector is referring to, speak up. It's better to ask a question now than have an issue arise after you've purchased the property. Learn more about potential issues — read about signs your house is in trouble here.
Get Pictures for Proof
Any home inspector worth using will bring a camera along on the inspection. The inspector will also be heading into places that you won't want to go if you don't have to (the roof, crawl space, under decks, the attic, etc.). Ask your inspector to photograph any potential issues that arise so you can see the issue for yourself and make sure you fully understand the problem.
Infrared and thermal cameras can give you and your inspector a look behind walls and floors that you otherwise wouldn't be able to get without ripping out drywall or flooring. Because this technology is so accessible, your home inspector should use these pieces of equipment throughout the inspection (though some home inspectors may charge an additional fee for this service).
Do Your Own Pre-Inspection
You can really learn a lot about a house just by looking at it. Make sure you do your own home inspection and note any possible issues. Look at walls and ceilings for any evidence of water damage (discoloration, stains, etc.). Try all the light switches and outlets you can to make sure the electrical layout makes sense. Peek at the electrical panel to see if there are any potential wiring issues (look for new wire, old wiring that isn't hooked up, etc.). On the outside of the house, look for drainage issues, areas with peeling paint, around decks and porches, inspect the siding, etc. Going in to your official inspection, you should have a good idea of things you'd like your inspector to pay extra attention to. Learn more about doing your own pre-inspection here.
Pay Attention to the Roof
A home's roof plays a huge role in keep the interior in good shape. It's also one of the most expensive and labor-intensive parts of a house to replace. Try to find out when the roof was last replaced, the age of the shingles and weather or not any warranty exists. Make sure your home inspector actually goes up on the roof during the inspection (unless it's physically unsafe to do so) — there's only so much you can see while standing on the ground. Keep eyes peeled for curling or missing shingles and pay special attention to anywhere there's a chimney, vent or skylight to look for signs of water intrusion. You can also see signs of water issues in the attic if it's accessible. Learn more about roof issues and necessary repairs here.
Look for Cosmetic Fixes
Freshly-painted walls and new floors are often signs a homeowner cares about the home they're selling. But sometimes these things can also be cosmetic cover-ups of underlying problems. Pay attention to any suspicious fixes — only part of a floor patched or repaired or only part of a wall is freshly painted — and ask your inspector to take a closer look.
GFCI outlets are part of the building code in rooms where moisture is present (kitchen, bathroom, laundry room, etc.). Your inspector will know how to test these outlets properly, and malfunctioning or non-working GFCI outlets could hint at bigger electrical problems. Learn how to test GFCIs here.
Look in the Attic
A well-functioning attic is crucial to protecting a home. If your home inspector can get into the attic without trampling insulation, you can often learn a lot about the home and any renovations or repairs. One very common inspection red flag is improper venting of bathroom fans into the attic (and not extending the vent all the way through the roof). If your bathroom fan is venting directly into the attic, all it's doing is sending moisture and humid air into the attic where it cause mold, rot or worse. It's also not up to code. If possible, have your inspector check for attic air leaks. While you can fix these attic air leaks, an attic with air leaks could have potential issues with insulation, moisture, mold or worse.
Give the Plumbing a Try
Losing water pressure or dealing with a slow drain can be indicators of larger plumbing issues. Make sure bathtubs and shower pans are leak-tested. And have the home inspector inspect the water main and shutoff points (very useful knowledge if/when you take ownership of the property).
Photo: Courtesy of Structure Tech
Furnace and Water Heater
Beyond making sure the furnace and water heater work properly, you should find out how old each one is and the last time each received service. Replacing a furnace or water heater can be pricy, so if either one is in need of replacing soon, you need to keep that in mind while putting together your offer on the property. You can also get a feel for how the furnace is cared for by checking the furnace filter. A filter that's in obvious need of changing can hint at other postponed or ignored maintenance.
Photo: Courtesy of Structure Tech
Don't Forget the Basement
An unfinished basement will give a lot of clues to the condition of the house and foundation. Look for cracks, signs of repairs and water issues. A crack in the slab or wall is not always a dealbreaker, but understanding why a crack appeared is important. Your home inspector will be able to tell you if anything needs further inspection from a structural engineer.
Photo: Courtesy of Structure Tech
Tackle One Project at a Time
When we first bought our old house, I tore right into a porch and kitchen remodel and started on a fence. Before I knew it, I had the whole house AND yard torn up. Ultimately it all came together, but there was a lot of added stress with everything going on at once. — Kirk Pennings
Home improvement causing stress in your marriage? Learn how to DIY without divorce here.
Insist on full written disclosure from the seller about remodeling, repairs, old damage, leaks, mold, etc. Check with the city or county, and get—in writing—the property's permit history, zoning, prior uses, homeowners' association restrictions and anything else you can find out. Forget "location, location, location." I say, "Verify, verify, verify!" —Paul Bianchina
Check Crime Stats
Before buying, get a report of police calls in the neighborhood. A bargain price may be due to the crime rate in the area. — Mike Collins
Ask Neighbors About Pros They Trust
If you're looking for plumbers, electricians or other pros, ask your neighbors. You tend to get decent advice if you get it from people who live near you. — Bob Bessette
Offer to Buy the Tools Too
If you buy from a couple that's downsizing, you might get a great deal if you purchase their garden tools, tractors, snow blowers and tools in general. —Alena Horsky-Gust
Shopping for a home can be a daunting process without the assistance of a buyer's agent; this is your agent who exclusively represents you. "In most cases, there is little to no cost to work with a buyer's agent," saysVeronica Sniscak, realtor and partner at Bob Lucido Team of Keller Williams Integrity. (Typically the agent is paid via the seller.) "Buyer's agents will help you navigate the home buying process and negotiate the best price and terms," says Sniscak. Find out the 15 questions you must ask before buying your first home. Here are 125 things you need to know if you own a home.
Using a dual agent is akin to using the same attorney for both spouses in a divorce. It may not be in your best interest and in some states dual agents are restricted or illegal."A dual agent represents both the buyer and the seller in the transaction. This can arise if a buyer calls the selling agent of the home. The agent is obligated to disclose the relationship to both parties as this can cause a conflict of interest," says Michael Trickey, CPA, and author of Finding Home: Everything You Need to Know-and Do-For Home Buying Success. These are our top tips for new homeowners.
Your dream home may include a shared driveway, private road, or a portion of property that a local utility must access to maintain elements on poles or buried underground. "When someone is granted an easement, they are granted the legal right to use the property, but the legal title to the land itself remains with the owner of the land," says Trickey. Check out these vital home maintenance tasks you need to know.
It's time to show how serious you are about buying the house with earnest money, also known as a good faith deposit. "This money shows that a buyer is willing to sacrifice money to put toward a home's down payment thereby hoping to secure the purchase of a property," says Trickey. The money is credited to the balance due at closing when certain conditions have been met, or refunded in the event the offer is not accepted. Our best tips for first-time homebuyers.
"This is a monetary gift, deal, or some other agreement that benefits both buyer and seller. A seller concession can be applied towards closing or repair costs," says Shayanfekr. A concession is most likely the result of a finding in the inspection report, such as a damaged roof or problems with electrical wiring. These home repairs take 10 minutes or less.
If an issue is found in the title, such as a prior foreclosure on the property, but the foreclosing party is not the same as the holder of the Promissory Note, it doesn't necessarily mean the deal is dead. "It is important that you make sure an attorney who specializes in "Title Curation" is involved. It is best to proactively involve a title curation specialist immediately after a defect is discovered," advises Pellegrini.
This term involves acronyms on top of acronyms, previously the TILA (Truth in Lending Act)/RESPA (Real Estate Settlement Procedures Act) Integrated Disclosure Rule, the TRID is a new lending regulation to help borrowers fully understand the terms of their loans. "It is an effort to help borrowers better understand the actual costs of borrowing and has strict disclosure timelines on utility readings and when the financing terms must be disclosed to the borrowers/buyers," explains Pellegrini. "Most Purchase and Sale agreements should discuss TRID and what will happen if one of the deadlines is not met. Otherwise, the buyers could default on the agreement and lose their deposits at the last moment," says Pellegrini. Check out this first-time homebuyers guide to home maintenance.
Myth: It's Your House, You Can Do What You Want!
Most of us like to think that when we own a home we can do whatever we want with it. The reality is that we have to take into account municipal regulations as well as any homeowners association requirements. Zoning and permits vary greatly from area to area, and every homeowners association is an entity unto itself. But no matter where you live, it's a fact that some home improvements will improve the market value of your home, while others will have no effect, or might even make it harder when it's time to sell.
So feel free to go with orange and brown vintage wallpaper if that's the look you enjoy; just understand that potential buyers might not feel the same way about it as you do! Do a little research into what projects will earn you the biggest return on investment, starting with this great overview.
Myth: Drop Your Insurance After Your Mortgage is Paid
Most mortgages require specific amounts of insurance to be carried by homeowners. It's certainly aggravating to be required to spend money, but mortgage companies don't do it just to be irritating. They require insurance because a home is a terribly expensive thing to replace. Far too many homeowners finally managed to pay off their mortgage and owned their home free and clear bilaterally to suffer a tragedy due to fire or natural disaster. Their loss is compounded when it's discovered that they dropped their homeowners' insurance once they were no longer required to have it.
Insurance payments may feel like money going out the door, but that's only when you don't need it. And when you do? Well, then it's too late. Of course, just because you should carry insurance is no reason not to search for ways to reduce its costs!
Myth: You Can Time the Real Estate Market
Those who've been in the property business for any substantial amount of time can recall neighborhoods that were supposed to "pop" for years or even decades, but for some reason never got started. All the buyers who'd moved in expecting a windfall were disappointed, even if their individual home was perfectly fine. Concentrate on finding the right home for you and your family, instead of trying to win the housing lottery, and you'll be much happier in the long run. Busting this myth is one of the most essential things a first-time home buyer can learn, along with the rest of this list of home buying secrets.
Myth: The Lowest Interest Rate is Always the Best Mortgage
A mortgage loan is incredibly complicated and any real estate professional can regale you with endless tales of loans and closings going off the rails for one reason or another. With so many different ways for things to go wrong, you want to pick a mortgage lender who understands the business and will work with you and your real estate agent to achieve the goal you all want: closing on a home!
Depending upon where you live, a common issue for mortgage lenders is getting comparable properties (comps) to make sure that the mortgage is properly secured. Because so much of real estate is local, the comps can easily be off in one direction or another. A mortgage lender who is local to your area will understand that comps a half mile to the east are accurate, while a comp from just a block west is in a different price range entirely. If terms like "comps" are a foreign language to you, refer to this list of 26 real estate terms you should know.