Buying your first home is among the most consequential decisions you’ll ever make—it’s also among the most emotional. For most people, it means security for you and your family, a greater degree of control over the place you live, happy holidays spent with family and friends, and the feeling you’ve moved up in the world—said differently, it means you’ve realized the American dream.
Unfortunately, those same emotions can lead to costly mistakes. It’s important as you view homes to know exactly what you’re getting into, and that means thinking long-term. Can you really afford your new home? Will its value increase or decrease over time? What changes will occur in your new neighborhood in five years, or ten?
To ensure that you’ve covered all the bases, and that there are no unpleasant surprises down the road, you need to create a checklist and stick to it with each house you view. Here are 20 questions that should be on your checklist:
Creating Your Checklist
1. What are your “wants” and “needs”? as you prepare your checklist, it’s important to distinguish between those things you’d like to have and those things which are essential. For example, you might want cathedral ceilings but know you could be happy without them. On the other hand, if you’re planning to have more children, you’ll need enough bedrooms to accommodate them. By separating what’s essential and what isn’t, you can more easily decide if a given home should stay in the running or be checked off your list.
2. What will all your expenses be? Many people focus only on their monthly payments for principal, interest, taxes and insurance. Before you decide you can afford your new home, be sure to add in monthly utilities, including electric, gas, and home heating oil (whichever applies). How much will you pay for cable or satellite TV, internet and phone service? Will you have a longer commute to work and, if so, how much more will you pay for gas?
3. Will you be able to resell your home, and for how much? How long do you expect to live in your new home? If you’re in a career which forces you to move every five years, find out what the likely resale value will be at that time. If you don’t have children and therefore aren’t concerned that local schools are of poor quality, you probably won’t be able to resell to anyone with young children.
4. Are there available grants or programs to bring down your cost? There are several grants available to first-time home buyers. Most have specific criteria for eligibility, such as those related to credit score, income and profession. For example, if you have a credit score of 580 or higher, you might qualify for an FHA loan, which will give you a relatively low interest rate and down payment. If you’re a law enforcement officer, firefighter, EMT or teacher, and you plan to live in a “revitalization” area, you could get 50% off the listed price of your new home under the Good Neighbor Next-Door program.
5. What’s in the contract? The contract you sign at closing includes many items, some of which you might not understand. First, read the contract thoroughly. If there’s anything you don’t understand, ask the mortgage broker or your real estate agent. Don’t sign until you’re sure you understand everything to your satisfaction.
Neighborhood and Surroundings
6. Will you be required to join a Homeowner’s Association (HOA)? Some of the homes you view might be part of an HOA. HOAs have specific rules that are included in a contract you sign. Be sure to read that contract carefully. It usually means you’ll be required to pay a monthly fee, for example, and you need to know how much that is. It could also stipulate that homeowners can’t rent out their houses. Be sure you know everything that’s in the HOA contract before you buy.
7. Who will your neighbors be? If you have young children, you might not be happy if most or all your neighbors are single or retired. If many of your neighbors are renting, it could mean that they’ll change frequently, or that they won’t maintain their properties, which could lower the value of your home.
8. Are many neighbors moving out? If you see a rash of “for sale” signs on your new street, there’s probably a reason, one which you need to find out. You don’t want to move into a neighborhood where home burglaries or vandalism are commonplace, or where the local economy is suffering, creating many foreclosures.
9. How important is the view and open space? If one of the reasons you’re planning to buy is a beautiful view or open fields where your children can play, make sure that view and those fields will be there over the long haul. If there are plans to develop that land, perhaps to build more homes, you need to know that.
Condition of the Home
10. Is the house “staged”? Understandably, home sellers want to get as much as possible for their homes. That means they sometimes “stage” the condition of the home, perhaps hiding poorly-maintained hardwood floors under area rugs or hanging paintings over holes in the wall. Take the time to make sure you know about these sorts of defects before you buy.
11. Does the basement flood? A basement that floods after every heavy rain can damage anything that’s down there, from the furnace to keepsakes to the home’s foundation. Check the grading of the yard—if it slopes down towards the house, it could mean that flooding is common. You should also check out the condition of the foundation, looking for any cracks, and the basement, looking for any signs of flooding.
12. Are there brown spots on the ceiling? Brown spots on the ceiling usually means that there are leaks. If it’s on a lower floor, it could mean the pipes are leaking; if its upstairs, it probably means the roof leaks.
13. Are there bad smells in or outside the house? If you smell foul odors, there’s a reason. Bad smells inside could mean there are problems with the plumbing or with family pets urinating or defecating on floors. If it’s outside, there might be a septic problem or a local factory that produces those odors.
14. Is the wiring up to standard? You won’t know if a house has wiring or electrical problems unless you check it out. Make sure all the outlets and switches are working properly. If they’re not, tell the seller that you want the problem fixed (at their cost) before you buy.
15. Are there termites or other pests? Insects like termites and carpenter bees can cause substantial damage to your home’s infrastructure. As you tour the home, look for any signs of these pests, as well as for the damage they cause. Look in storage areas for cans of pesticide.
16. Does the well tend to go dry? If the house gets its water from a well, you need to know whether it dries up during local droughts. Be sure to use the faucets to check water pressure and to ask if well water is a problem. You also need to be sure that the well water is safe to drink.
17. How old is the roof? Every roof has a lifespan and eventually needs to be replaced. If it’s a shingled roof, you can expect it to last about 25 years; if it’s slate and tile roof, it will last longer, usually as much as 50 years. Find out how old the roof is, and whether it’s been repaired or patched recently. Replacing your new home’s roof will cost you many thousands of dollars.
18. What’s the condition of the driveway? Check out the condition of the driveway, looking for cracks and holes. If you need to replace a concrete driveway, it will cost on average from $3,500 to $7,000, according to Angie’s List, but the price goes up the longer the driveway is.
19. What’s the condition of the furnace? The average furnace will last 16 to 20 years. Find out the age of the furnace in your new home. If it’s older than 15 years, odds are you’ll need to replace it before long, and that will cost you about $5,000.
20. Have any walls been recently removed? People often remove walls, perhaps to turn 2 small bedrooms into one large, master bedroom, or to create an open floor plan. This, in itself, is not necessarily a problem—unless the homeowner did the work himself. He could have inadvertently removed a load-bearing wall, which would shift weight to other walls and cause damage in the future.
Buying your first home can be an exciting experience, but you shouldn’t let your emotions dampen your objectivity. Make sure you do your homework, finding out if you can afford your new home, that the neighborhood is stable and thriving, and that the home you see during your tour doesn’t have any hidden problems that will mean costly repairs in the future. After all, you don’t want the happy emotions you feel on move-in day to turn to feelings of regret in five years or ten.
If you’re looking for assistance with buying a hold of putting together a plan, send me an email and I’ll be glad to help!