What To Know Before Buying A House
A final walk-through is an opportunity to view the property before it becomes yours. This is your last chance to view the home, ask questions and address any outstanding issues before the house becomes your responsibility.
what to know before buying a house
1. Use a trusted realtor. We all know that realtors get a cut of the sales price of a home which makes some buyers hesitant to use a realtor: they believe it drives up the overall cost. Keep in mind that the seller, not the buyer, pays the commission. Brooke Willmes, real estate agent at SPACE & COMPANY in Philadelphia, says that potential buyers should keep in mind that a listing agent (the agent representing the seller) doesn't protect your interests and "that agent would simply pocket both sides of the commission." That means that you're not saving money. A savvy realtor who works for you can protect your interests and guide you through the buying process - from negotiating a price to navigating home inspections.
2. Remember that a house purchase involves a contract. When you're buying a house, there are papers to sign. And more papers to sign. Many of those papers - which are actually contracts - look like "standard" home buying contracts with no room for negotiation. That isn't true. Contracts are meant to be negotiated. You don't have to sign a standard agreement. If you want more time to review your inspection, wish to waive a radon test or want to make a purchase subject to a mortgage approval, you can make that part of the deal. That's where a savvy realtor can help. See again #1.
3. Don't necessarily buy for the life you have today. Chances are that buying a house will be one of the bigger financial commitments you'll make in your lifetime. Before you agree to buy what you think might be your dream house, consider your long-term plans. Are you planning on staying at your current job? Getting married? Having kids? Depending on the market and the terms of your mortgage, you may not actually pay down any real equity for between five and seven years: if you aren't sure that your house will be the house for you in a few years, you may want to keep looking.
6. Buy the house you know that you can afford. This can be different from the price that your mortgage company believes that you can afford. When my husband and I bought our first house, we were approved for a mortgage of about three times more than we ultimately ended up spending. Fresh out of law school and working for established firms, our finances looked good on paper. But we dialed back our expectations because we weren't convinced that our income and expenses would remain at those levels. We were right: two years later, we started our own business just as the economy turned south. The less expensive house meant that we could still make our payments even with less income in pocket. So what's the best ratio to use? Some lenders suggest that you can afford mortgage payments totaling about 1/3 of your gross income but others suggest closer to 28% for housing related costs including mortgage, insurance and taxes. There are a number of factors including your projected income, interest rates, type of mortgage and the market. Ask your mortgage broker to help you understand what's in play.
Buying a house can take as little as a few days if you're buying in cash, or can take years if you're counting the amount of time it takes you to save money for a down payment and decide where to live. In a competitive housing market, you may put in multiple offers on homes before one is accepted. Conversely, mounting worry over a housing recession could lead more sellers to pull their homes from the market, making it more difficult to find a suitable property. If you already have your money saved and have a good idea of the neighborhoods and type of home you want, the process will probably take you two to six months. Ask a local real estate agent for a more accurate timeline based on your local market conditions.
Buying a vacant lot is an important and complex decision, just like any real estate purchase. For starters, there are plenty of reasons to buy a parcel of land. If you buy a house, it's probably so you can live in it; but with land, you could choose to build your own house, use the property as a long-term investment or even to start a business. Property also introduces a host of issues you don't normally face when buying a house. There are all sorts of restrictions that could apply to a vacant lot; you might not be able to build a house on it at all.
Before shopping for a piece of land, you should develop a general idea of where you'd like to make a purchase. You can go for an exploratory drive and use online resources to help you. For example, if you're buying a few acres of land to build a house you'll likely want to consider things like access to schools, your job, grocery shopping and restaurants. (Later we'll delve into specific land concerns.)
Finally, remember that utilities and building costs will be expensive. In some cases, you may have to pay to have electricity and water run to your house before you even begin monthly service fees. On some land, you'll have to drill a well or install a septic system before home construction. If you're buying a piece of land as an investment, you'll bypass quite a few of those headaches.
Land destined to be built on or sold is typically carved up into smaller parcels that make up subdivisions. The land in a subdivision likely already has some restrictions placed upon it that you'll want to know about before buying. If the vacant lot you're eying is in the middle of an already developed community, chances are good that a homeowner's association governs that area. Homeowner's associations command membership fees and set the rules for behavior and decorum in the area. Following their rules could dictate how frequently you cut your grass, where you park your car or even what kind of pets you have [source: Christensen].
Once you've safely determined that your future house won't be underwater the next time a big storm blows through, there's only one last hurdle to crest before you're ready to own a brand new piece of property: bureaucracy.
It's a sad fact of real estate life: Just about everything you build is going to require a building permit. You'll have to deal with government zoning before starting construction, and obtain permits for building, permits for burning, and permits for, well, the list goes on and on. Yes, it's a hassle, but permits aren't necessarily bad news. After all, remember that restrictive covenants protect you from the nasty habits of your neighbors even as they restrict you. Construction permits help protect the land and keep you honest to building codes, and those building codes ensure you can't haphazardly build a structure that's going to collapse on itself like a house of cards.
When mulling over the things to consider when buying a house, the process can become increasingly daunting. There are, after all, a lot of things to consider when buying a home. For starters, American economists have scrutinized mortgage interest rates ever since the housing recovery started to gain traction. When it came to buying a home in 2015, experts predicted that mortgage rates would surpass five percent, yet interest rates remained below four percent. While higher than what we had become accustomed to, that was still historically low at the time. Nevertheless, low interest rates have helped many prospective homeowners actively participate in the housing market. Some people have even made the move from renting to owning out of fear of future rate increases. While not inconsequential, interest rates are just one of the many factors to consider when buying a house. Interest rates are by no means the only factor that should determine when you are ready to buy a home.
If you are thinking about buying a house, you should ask yourself several questions to determine if it is the right time to do so. Whether you are a first-time homebuyer or a seasoned investor, here are some of the most important things to consider when buying a home:
As frustrating as it may be, one of the largest factors to consider when buying a house is something you have no control over the local market. When it comes down to it, you may not even be given any options. The market you are interested in may not have any homes in your price range or the right location. On top of that, some market values dictate whether or not owning is even a viable option. While it is becoming cheaper to own than rent in some markets, there are those where renting is justifiable. It all depends on the current state of the particular market you are interested in. So while interest rates are important, it is equally important to own in the right market.
There are numerous qualities in a house that buyers should consider before making an offer. Each homebuyer is different, so finding the right home for you will require you to consider what you are looking for. Consider these elements of a home before making your decision:
If you are not looking to renovate, some houses that meet all your requirements may have been built several decades ago. A factor to consider when buying a house is the age of the property. An older home may have its certain charm and appeal, but in turn, may need more upgrades, repairs, and improvements. If you are interested in an older home, make sure you have the time and budget for renovation projects. Building codes are also a thing to consider when buying an older house. Codes may have changed over the years, so having a basic understanding of the building laws then and now can help you better understand the state of the house. Consult your realtor as they may know the state of the house or where to find the information.
Several factors must be considered when buying a house, such as the housing market, interest rates, and plans you may have for the future. If you purchase a house, it may be difficult to be flexible when it comes to your family or career. You also may be unsure if a neighborhood is the right one to settle in long-term. If so, you should consider renting in the area first and save any big purchases for a later time. To save money and remain flexible, many young professionals choose rentals over homebuying as there are several healthy rental markets across the country. This seems to be a more popular trend as the U.S. Census Bureau reports the homeownership rate was around 65% last year. 10 years ago, homeownership was nearly 70%. 041b061a72