First-time home buyers
Whether you have spent years saving and preparing to buy a home, or you still aren’t sure if it is something you can even dream of, the questions surrounding a first-time home purchase can feel endless.
Here are some tips to help you with the process of becoming your own landlord.
Pre-qualify for a loan
Being pre-qualified for a loan determines how much house you can afford. It also allows you to move more swiftly when you find the right house, especially when you aren’t the only interested buyer.
Shop for mortgage rates and terms
A difference of even half a percentage point can make a huge difference in how much you pay over the life of a loan. For example, the difference in the monthly payment on a
$100,000 mortgage at 8 percent vs. 7.5 percent is about $35 per month. Over 30 years,
that’s $12,600.
Using a buyer agent
A buyer agent is legally responsible for representing the buyer’s interest in a real estate transaction. Generally, the buyer agent is compensated by the seller at the time you purchase a new home. There are some limitations to using a buyer agent, however. Before you decide, have a Realtor explain the advantages and disadvantages of using a buyer agent.
Features that help or hurt resale value
In some areas, a swimming pool actually detracts from a home’s value and makes the home harder to sell. In neighborhoods with two-car, attached garages, a single-car or detached garage may impact the home sale and future value. Your Realtor can point out features that hurt, as well as those that help, resale value.
Rate the houses you tour
After touring each home, write down what you liked and didn’t like. Develop a rating system which will help you narrow the field down to the house that’s the best for you.
Where to start when thinking about buying a new home.
Big or small, cottage or castle, it all starts in the same spot. Deciding what is it that you really want? What type of financing? Do I need to get a loan? Knowing what you want in a property will be the first step. Remember you eat an elephant one bite at a time. If you can’t do the castle now make a plan and stick to it so that you can get the castle. That is where a good buyer’s agent and loan officer will save you time money and STRESS! The process should be done as a couple if married and decisions made together.
Is it Better to Buy an Old Home or a New Home?
As you embark on your venture to buy a home, one of the first decisions to make is whether to buy new or purchase an existing home. Each choice has its advantages, and there is no single answer which works for everyone.
You may be drawn to the shiny new, energy-efficient appliances, the great room, and the beautiful master suite offered in a new home. But you may also like the charm, the canopy of trees that drape over the sleepy neighborhood streets, and the increasing value of an existing home you’ve been eying.
Here are some things you’ll want to ponder as you decide which route to take.
Existing Homes
Existing homes offer many considerations for potential homebuyers, including:
The neighborhood – Many people are drawn to developed neighborhoods for the sense of community that has been established. The mature landscaping and developed trees are often a considering factor.
Maintenance and repair – If you’re considering an existing home, be sure you have a good handle on the working status of all major systems. Hire a professional home inspector to check out the house. As appliances and systems age they naturally require repair and replacement, something which may be reflected in a purchase price.
Home improvement – If you enjoy small repairs and home improvement projects around the house, then an existing home would be your cup of tea.
Existing features – When you buy an existing home, you typically don’t have to worry about buying the extras, such as blinds for the window, a security system, or a landscaped back yard.
Land – In most metro centers, new homes may have less land than existing properties. Why? Because of changes in land-use patterns.
Location – Existing homes are often found in older, more convenient metro core areas rather than outlying suburbs.
The opportunity to remodel – In some cases buyers may prefer an older home in a particular location which can be modernized or expanded. In effect, use the existing home as a base to build a unique property.
Price – In general terms, existing homes tend to be less expensive than new properties. According to the National Association of Realtors, the median price for an existing home is expected to reach $146,600 this year. In contrast, says the National Association of Home Builders (NAHB), the median price for a new home in August was $167,600. As well, existing homes are likely to come complete with items which may represent new home extras — blinds, landscaping, built-ins, etc.
Track record – When you purchase an existing home, you know how much the property has appreciated over the years — in effect, you have an index of sorts which measures the community’s marketplace appeal: At the same time, like stocks and bonds, you know that past results do not guarantee future marketplace performance.
Taxes – Depending on your state, you will likely have lower property tax rates. Also, many older households aren’t required to pay for local bonds associated with new development, such as schools, parks, or road or transportation improvements.
Traditional layout – If you like the formal living and dining rooms, an existing home will likely satisfy you.
New Homes
On the other hand, new home considerations include:
Warranties – Many homebuilders offer 10-year warranties from third-parties who will be there if certain problems develop over time. In addition, appliances and systems also include direct manufacturers’ warranties for such items as stoves, clothes washers, etc.
Modern architecture and layout. If you prefer a great room (oversized family room), bigger closets, more bathrooms, and media niches over formal dining and living rooms, a new home is likely to better accommodate you.
Options – When you buy a new home, you get to decide the particulars of what you want. You can also select any of the upgrade features the builder may offer, choose the right paint for each room, select the cabinets you want, and do much to customize the property.
Price – As we saw above, new homes are typically more expensive than existing homes. But, new homes are likely to need fewer repairs or replacements because everything is, well, new, warranties are in place, and normal wear and tear has yet to begin.
Safety features – Most new homes now have hard-wired smoke detectors on every floor. They are usually interconnected so that if one goes off, they all go off.
Energy efficiency – Over time homes have become better insulated and energy costs for given purposes have been reduced. Better windows, more efficient heating and cooling equipment, better control of air infiltration, and greater use of insulation, new homes consume half the energy of homes built prior to 1980, according to the NAHB.
Less maintenance – New homes are often made with materials that require less maintenance, such as aluminum siding, vinyl windows and trim that never need painting, and wood decks made with pressure-treated wood that resists rot and insects.
The Real Answer
So which is the better choice – new or existing?
There’s no single, objective answer that’s right for everyone. We each have different preferences, and the values that best suit Jones may be all wrong for Smith. Moreover, terms such as “new” and “existing” are among the many factors to consider when looking for a home. All homes are unique — they each offer a combination of factors which no other home quite duplicates. There are trade-offs with every property. The real question is not which is “better” – new or existing – but rather which specific property best meets your needs. The only “correct” answer is unique to you: It’s whatever you prefer.
A List of Desires Can Help Narrow Your Home Search
It’s an enviable position in which to find one self, but it happens. You’re approaching the end of your home search, and you’re torn between two or more homes. The major deciding factors – asking price, quality of the neighborhood, quality of school district and commute time to your office as well as your spouse’s – are relatively equal, so those won’t help you favor one home over another. What to do now? The decision could drive you batty. If you lean toward one home, you’ll be looking over your shoulder longingly at the other home. All of those “What ifs?” questions will run through your mind. Maybe the carpeting in the other house would have been more versatile. Maybe the layout of the other home would have been more agreeable both for your furniture and for your family’s lifestyle. Undoubtedly, after you make your decision and move into the home of your choice, you’ll encounter situations during which you may question – if only for a brief moment – your decision.
And it’s natural for those thoughts to cross our minds at some point because it’s human nature to view the grass on the other side as greener. But depending upon the process you go through before you select your home and close the deal, you’ll either settle that question in your mind with the knowledge and satisfaction that in general, you’re happy with your decision; or you’ll be in a state of regret, which will ruin what should be one of the most exciting times in one’s life. As with so many other aspects of the home-search process, you should get out your trusty pen and paper and prepare to take some notes that explore your preferences and those of your family. When you’re having trouble making a decision, you’ll need to consider which amenities are most important to you and then do a side-by-side comparison of homes to help you narrow down your choices, ultimately pinpointing the best choice.
Ideally, you should sit down before you even begin your home search and list all interior and exterior amenities that are preferable to you. Place a star beside the amenities you consider mandatory (for example, a garage, a fourth bedroom or an eating area open to the family room). Before you arrange to view a home with your Realtor, make sure the home in question contains your “required” amenities. Your Realtor will appreciate the time you’re saving him or her by stating up front what it is you’re looking for, so that the two of you won’t spin your wheels viewing homes that clearly aren’t of interest to you. To help you get started as you begin to consider important interior amenities on your personal priority list, make sure you list the following – and feel free to add more as you see fit:
Number of bedrooms: How many does each home contain, and how large are they? Will you have an extra bedroom to convert into a home office, play room or hobby room?
Number of bathrooms: Think you can live with two instead of two and a half or three? Think again if you have children; otherwise, you could be breaking up World War III every single morning.
Two-story/one-story: Is it important to you to have the bedrooms on the second floor for reasons of privacy?
Family room: Does the home have a family room, and how large is it? Will it be adequate for the size of your family? Is it connected to the kitchen? Is it important to you to have those two rooms connected so that you can keep an eye on young children or interact with guests as you cook in the kitchen?
Size of kitchen: Do you have adequate counter and walking space for cooking? How large is the eating area? Will you have to move your table every time someone needs to walk through the area? Do you have enough cupboard space for your needs? Do you have a pantry?
Closet space: How many and how large? Will you have a coat closet? Are there enough closets in the master bedroom to accommodate you and your spouse?
Fireplace: Does the house have one or more?
Windows: Is the house filled with light, or do you need lights on during the day in order to get adequate light? How old are the windows? Are they in good condition?
Appliances: How many of them come with the house, and are they in good working condition? What is the status of the warranty for each appliance? How many appliances are you going to have to purchase if you move into each home?
A side-by-side comparison of these features can help you make your decision based on careful consideration, not on impulse or emotion. The following exterior features of a home are a good start to your list of desired criteria. And as you begin to make notes, you’ll probably want to add others according to your needs and those of your family.
Location of the lot: How close is the house to the street? If it’s close, is that a selling point for you because you want to minimize the yard maintenance you’ll need to perform? Or is it a negative point because you want to install landscaping or have a suitable play area for your children? Is the home on a corner lot, which often means you’ll have more land to mow and maintain? Is the lot on a busy corner? If so, you may have difficulty leaving your home during rush hours, and you’re probably going to have to listen to the noise of traffic. You may also want to consider whether passing headlights will be traveling across your bedroom or living room walls at night.
Another point to consider: Does the house face south, allowing you to enjoy maximum sunlight? Backyard: Does the house have a backyard, and if so, how large? Do you plan to install a pool? If you do, does the yard seem large enough for a pool? Will you have space left for landscaping and/or a table and chairs? What kind of privacy does the yard have? Is there a fence already installed, or will you have to assume the expense of building one? If the fence is already there, is it stable, or does it look like the next strong wind will cause it to collapse? Have the previous owners made any attempt to landscape the backyard, and if so, is it well-maintained and attractive?
Deck: Does the backyard have a deck? If you plan to entertain, or your family enjoys spending time outdoors, a deck is an excellent selling point. If the home doesn’t have a deck, you can assure yourself that you’ll build one, but it’s a large and sometimes expensive task.
Distance between homes: How close are you to your neighbors? Are some homes two-story and others one-story? If so, your neighbors may be able to peer out of their second-floor windows and see directly into your backyard. Your next-door neighbors may be able to wave at you during breakfast. This may not be an issue, of course, if screens have been built or trees provide privacy. If you have to plant trees or build screens, remember to factor those expenses into your immediate plans.
Landscaping: Does the home have any landscaping, and if so, is it in good condition? Will trees have to be uprooted or planted if none exist? Is the neighborhood managed by a company that maintains landscaping for a monthly fee? It may be worth your while to explore that option. Do the neighbors on either side of the home appear to take good care of their own landscaping? Do their trees obstruct the home and provide too much shade?
Garage/driveway: Does the home have a garage, and if so, how large is it? Would you be willing to settle for a carport? Are you going to have to build one? (Remember that you’ll still have to figure out where to store your lawnmower, tools and other items typically stored in a garage.) Does the home have a driveway either beside it or in front? How easy is it to leave the home using that driveway? Will you have to back out onto a major street?
Siding: What kind of siding does the home have? Is it stucco, wood, stone, aluminum or vinyl siding? And is it in good condition? If it’s painted, remember that you’ll face the task of repainting your siding periodically. If the home is brick, do you notice any loose bricks?
Front porch: Does the home have a porch out front? This may be a selling point if you enjoy spending leisure time outdoors. Porches also can add value to your home if they’re well-maintained. They provide a prime opportunity for displaying potted plants, hanging baskets and other greenery, not to mention a location for a relaxing porch swing.
Even if you’re torn between two homes, and you’re convinced that they’re both perfect, reviewing your notes of the interior and exterior features of those two homes can go a long way toward helping you make your final decision. The little factors that don’t seem terribly significant now can enhance your home or create a hassle later. If you’re still wavering, ask your Realtor for guidance. Realtors are experts in pinpointing the criteria that homebuyers should take more time to consider. By the time you’ve reached this stage of the home buying process, your Realtor will know your preferences well enough to provide you with objective guidance.
This article was furnished by Michelle Collins. If you have additional questions, she can be reached by phone at: 801-690-3822 or by email at: michellec_88@msn.com
