For most of us, owning our own home is a goal we strive for. Many renters dream of the home they can make their own; somewhere they can customize each room to their own liking, paint the walls any color, and design the landscaping to their own vision. Owning your own home means no more roommates or fighting over parking spaces and saying goodbye to noisy upstairs neighbors. Transitioning from renting to owning is a big step and it’s important to understand what buying a home actually entails.
At Buy My House Now we strive to guide future homeowners by providing advice on how to navigate this new adventure in their lives.
Prepare your financial background
When you are looking to purchase a new home, your credit score will affect your interest rate. The higher your credit score the less interest you pay. When talking about loans, the banks see a lower credit score as a risk and thus apply a higher interest rate based on your score. Reaching out to a loan officer is a good idea so you can get a better idea of your financial situation before buying. You must be mindful when deciding on mortgage loans. Changing jobs or pay structure may affect your options. If you have debt, you may decide to pay some of it down before continuing with the home buying process.
Research mortgage options
As a homebuyer, you become a customer to all sellers. This gives you the freedom to shop around for a lender that best fits you. It’s prudent to compare mortgage rates based on the type of loan, location of the home, purchase price, credit history and down payment. The rates you receive will depend on the local economy. Keep this in mind. Review not just local real estate market trends, but also national trends before breaking your lease.
Don’t forget when you purchase your new home closing costs should be factored in. In addition to a down payment, homebuyers are often on the hook for third-party fees that are due at closing. These may include credit checks, title insurance fees, and escrow fees.
If you are serious about buying a home, it’s recommended you be pre-approved for a mortgage. When you already have a budget before house hunting you eliminate impractical options, which saves precious time and effort.
NOTE: Sellers usually favor offers from pre-approved buyers!
Budget your expenses
There is more to consider than the monthly mortgage payment when you purchase a home. When you buy a home you also commit to years of property taxes and homeowners insurance. On top of that, you will have to think about the maintenance of the property as well as your utility bills.
Be sure to take all expenses into account when you budget. If you have carpets they’ll need to be replaced every five to ten years depending upon use. Those fees will include disposal of the old carpeting and installation of the new. Now extrapolate this kind of thought to all the fixtures in your new home.
- Kitchen Cabinets/Appliances
- Water Heater
- Garage Door
- A/C Units
While the above are all long term upkeep concerns, you need to also consider ongoing maintenance of your new home. Landscaping falls into this category.
After you’ve budgeted for all the home maintenance fees, you should be aware of any government fees and services you may be forced to pay; Trash service, water usage, gas, and more.
It is a general rule-of-thumb that you will spend between 1%-2% yearly on the maintenance of your home. This means for a $200,000 dollar home you may spend anywhere from $1,000 to $2,000 dollars each year. Of course your actual expenses will vary depending on utility rates, climate, property age and more.
Budget your time
Maintaining a home is a big responsibility. Your new yard will take more time and effort than you originally expected. Your new Home Owner’s Association (HOA) may have unique rules and guidelines for the neighborhood. It is highly recommended you read through their requirements so you have a full understand of your new responsibility. Repairs will take time. Will you do them yourself or hire someone else? Weigh the costs of both.
If you decide to do it yourself be sure you aren’t doing more bad than good. You do not want to make existing problems worse!
Consider resale value
Renters can live in any neighborhood they please without having to factor in surrounding home values. As a homebuyer, you’ll need to analyze locations with appreciation history over louder more popular neighborhoods that may dissuade future homebuyers.
Consider open floor house plans without typical dining or living rooms. While you may be excited about the potential for family gatherings or social events, the non-traditional floor plan may dissuade buyers later on. Be wary of the trendy layouts, many buyers today still prefer traditional dining and living spaces.
Take your time when looking for a new home. There are a lot of factors to consider and resale value should not be overlooked.
Learn more about your Arizona neighborhood
If you think you’ve located the perfect home, research the neighborhood before you buy. Look at your future neighbors. Do their homes appear to be kept up? If you buy a home and realize your neighbors are terrors, you will find yourself in a stressful financial spot. If possible talk to the neighbors and get to know them. A little conversation can go a long way.
Remember, when you buy a home you’re also buying the neighborhood.
Chances are the people in your neighborhood are going to be there for the long haul. While you don’t have to be best friends with your neighbors, establishing friendly relationships can go a long way towards avoiding any unnecessary problems. You’ll want to be on good terms with those in the neighborhood so you can feel comfortable going to them (and they to you) should anything go awry. A reliable neighbor is irreplaceable in the event of locking yourself out of your house or to water your plants when you go on vacation.
More on landscaping and repairs
All your landscaping and repairs are done for you when you live in an apartment. Transitioning to a house means that’s your responsibility now. Gardening tools such as lawn mowers, hedge trimmers, and other accessories will come at an additional cost. If you decide on doing your own repairs budgeting for tools is a necessity. Factoring these into your initial budget can save you many headaches in the future.
Adopting a landscapers mindset is also helpful when moving into a new home. Weeding the flower beds, raking leaves and mowing your lawn may become part of your weekly routine. Walk carefully through the yard of your dream home. Take note of plants, trees, and brush. A consultation with a local arborist may give you additional insight concerning large vegetation on your property and how to properly take care of them.
Think long term & stay focused
Searching for rental properties is a relatively simple process. Rentals are primarily short-term solutions and their leases have scheduled endings. On the other hand, locating a suitable home to buy requires a much more thorough examination. When you walk through a potential home think about the features you can not change. This includes location, size, layout, and neighborhood. Avoid issues that are cosmetic. Wallpaper color and light fixtures can be altered. Take inventory of where you are financially and where you plan on going. Selling a home is considerably more difficult than breaking a lease.
When deciding on a home to purchase in Phoenix or anywhere else in Arizona, take careful note of cosmetic improvements you’d like to make versus critical issues that you HAVE to make. Those extra costs should be factored in before making an offer.
Find your vision
Decide what you want to do with your home before you purchase it. Get a comprehensive home inspection so you can identify any existing issues or any problems that may develop down the road. Ask questions. You’re doing yourself a disservice if you do not understand everything in the inspection report. Your home inspector should have the ability to explain to you exactly what would be involved in repairs.
Furthermore, consider other long-term issues, such as school districts in the property’s area and zoning information. Both of these things would be nice to know just in case you decide to have children down the line or you choose to install a pool.
The perfect home is one you’ll love for many years. Finding your “vision” will help you do just that.
Home ownership means you’re committed to one spot for the long-haul, so make sure you can afford the bills, learn how to care for your house and property, and nurture the friendships you build along the way.