Hopefully, the answer is no. There’s too many unknowns initially, which is why dating exists. Finding the right house is a lot like dating. In order to find “the one,” you need to have a set of criteria that matches your lifestyle and expectations.
This exercise is intended to help you acquire critical knowledge that will help you make an informed decision when buying. Since each individual is different, you need to do this on your own before speaking to an agent. You want to have an idea of what you’re talking about as well as your must have criteria. This will make it easier to ask better questions down the line and improve the likelihood that you get what you want rather than settling for less.
As you obtain more information, some of your criteria might change–that’s totally fine. You need to have a launching point and foundation. Here are some important questions to consider.
Perhaps the most important element of your initial research is deciding on a location or geographic area. There are several things that you should consider to help guide your search.
Some people enjoy living in the city, others like the suburbs, and some appreciate rural areas. This comes down to personal preference, but there are some general rules of thumb that can guide your search.
In general, the closer you are to a major city, the more it will cost. Living closer to a city means that there are more economic opportunities (jobs) within close proximity, readily available public transportation, conveniences (stores), and entertainment nearby. Moving further away from the city can mean the exact opposite. Some people want convenience, others would prefer a big backyard or more square footage for less.
You have to decide what matters most to you.
When you think about high and low crime rates in your state, certain areas probably come to mind reflexively. As you might imagine, the vast majority of people are concerned with their own well-being and safety.
To research crime in a given area, a great resource is neighborhoodscout.com. It breaks down each town even further so that you can see which parts of town might be considered safer than others. In addition to reading about various neighborhoods, make sure to drive or walk around the place you plan on moving to. You’ll immediately get a feel for whether you feel safe or not. Just a word of advice: if you aren’t comfortable walking around a given area, you probably don’t want to live there.
If you want to take your research to the next level, consider grading towns or neighborhoods that you visit. Although you should create your own definitions when it comes to safety anything else in the home buying process, homes are generally graded from A to D. An A class neighborhood is the safest, most well-kept and probably the most expensive. Next, a B class neighborhood will be pretty safe but might have occasional crime and also be the second most expensive area to buy in. C class would be a fringe neighborhood and D would be a war zone. This is all subjective, so you need to look into this on your own. No real estate agent is allowed to comment on this matter, so it needs to be hashed out by those purchasing the home.
The average American spends about 1 hour commuting daily. You might prefer living closer to work, with a shorter commute, but it also might not matter to you. As more and more people start to work from home, it will eliminate commuting as a major factor. For the time being, however, let’s factor in this component.
Assuming you still have to commute to your job, you might want to consider how long it would take you to get to work from the town or city you plan on moving to. Do a quick Google Maps search to see how long it would take. Try looking at rush hour because this will give you a feel for a more accurate time than checking at a random time during the day. Consider access to major highways and distance to get to each as well.
Another factor to consider is the availability of public transportation. If you currently rely on transportation such as trains, it probably makes sense to look in areas that have these resources.
If you have kids or plan on having kids when you move, then you definitely need to factor in educational opportunities. Even if you never plan on having kids, school districts matter.
Most Americans move every 5-7 years, so unless you’re an anomaly, you will probably be in the market of selling your house at a later date. Generally speaking, areas with better school districts have higher home prices. Although not always true, it’s important to do your research because it can be a huge sticking point for people with families.
Check out websites that rank school districts and even look at what Zillow has to say. Then, cross reference this with what people have to say in community Facebook groups and ask people you know who live in the area. If you don’t know anyone in the area, you can probably ask anyone at a coffee shop or local worker. These reputations tend to carry, so the locals will be aware of how their town is perceived.
Make sure to take the time to research school districts. If it doesn’t end up being a big deal for you, that’s totally fine.
Do you want to be close to friends and family? Maybe you want to be close to one, but not the other. Perhaps this doesn’t matter to you at all. There are pros and cons to each side, but this discussion ends here. It’s only mentioned so that you begin to think about it.
For some reason, this always seems to be the most mysterious part of the planning process. Even though you’re just gathering research, try to make sure you have a price range that you’re comfortable with and make sure that you have your finances in order. Just a few words of advice in case you need them.
First and foremost, have at least 3% or higher for a down payment. Since each part of the country has different real estate prices, all you need to know is what 3% of a home you are trying to buy is, plus an extra $5,000 or so for closing costs as a rough estimate. In addition, try to save up extra reserves because things will go wrong once you own the house. Having a rainy day fund will enable you to sleep better at night even if you never have to use it.
Make sure that you have an average or above credit score (a higher score will get you better interest rates). If you’re unsure what your credit score is, you can do a soft inquiry with one of the major credit bureaus. This is an especially good idea if you decide to purchase a house with another person because it will reveal their past history and help you decide if that’s the right choice for you.
According to Experian, there are 5 ranges of credit. Exceptional credit is anything at 800 or above. A very good score is somewhere between 740 and 799, for home lending purposes many lenders say that anything above 760 gets the best interest rate. 670-739 is considered good, but then it gets dicey. Somewhere in the range of 580-669 is fair and anything below that is very poor. If you’re in either of these latter categories, you probably want to try to boost your score before applying for a home loan.
As a final aside on the topic of credit, DON’T try to take out a car loan or make any other major purchase around the time you’re looking for a house. These will be red flags to lenders.
You’ve probably seen one of those HGTV memes before. One of them says “I sharpen colored pencils and my wife works 1 hour a month collecting butterflies. Our budget is $1.8 million.”
There’s a big difference between what you wish you had, what you can afford, and what you want to spend. Unless you’re inheriting a fortune or hit the lottery like our pencil sharpening and butterfly collecting friends, you need to be realistic. That leaves you with two possibilities.
Some people would like to maximize their budget to get the nicest house that they can afford. Others prefer to stay below budget. Since no two views are the same, it’s up to you to figure out what you’re comfortable with. Even though a pre-approval will ultimately dictate this, you can still plan ahead to get a feel for what your budget might look like.
A great feature on Zillow is the Monthly Cost Calculator. You can mess around with down payment, interest rate, and various other factors to get a feel for what fits your budget. Having a price in mind will let you see what you can get for your money in different areas and enable you to adjust your expectations to coincide with your budget.
The two main living situations people buying property debate between are houses and condos–town homes are getting grouped here,too. Each has inherent pros and cons that come with them. In order to make an informed decision, you need to look into both.
The quintessential American dream: a house with a white picket fence.
Even if this isn’t exactly what you’re looking for, houses symbolize a greater degree of freedom for owners. Your property, your rules. Unlike condos and town homes, you don’t have to follow a set of guidelines prescribed by an association. Another benefit to owning a house is that you don’t need to ask for permission to do updates. Owning a house gives you far more independence.
Another thing to consider is privacy. Unless you live in a multi-family, you don’t share walls with your neighbors. In addition, homeowners have more space outdoors (usually) as well as more storage like attics, basements, and so forth.
The biggest selling point for houses is appreciation. Single family houses historically appreciate at better rates than all other domiciles. As such, your home has the potential to increase in value faster, making you wealthier by improving your equity.
The main arguments against home ownership are that houses cost more money than condos and you are responsible for maintenance. As noted in the benefits section, houses appreciate better than condos. The downside of this is that they become more expensive to purchase, so you might need more capital depending on the home you go for. Repairs also seem to deter people from buying a house because it can get expensive if you’re not handy.
From a financial perspective, condos tend to be cheaper and as such require less money for a down payment. In effect, there is a lower barrier of entry to acquiring a condo than there is for a house. Another key benefit is that a condo’s maintenance is primarily taken care of by the HOA (Home Owners Association). You are only responsible for taking care of the inside of your condo.
The final sticking point on condos is that some have abundant amenities. Yes you pay an HOA fee, but you might get a fitness center and a pool.
The biggest downside of owning a condo is paying a monthly HOA fee. When comparing the price of a condo and a house, be sure to include this in your calculations because it can get pricey. Plus, if a roof gets damaged or there are other exterior repairs needed, you will get a special assessment that needs to get paid in addition to your HOA fees.
Then there’s the lack of control. You have to abide by the rules put forth by the association. Something as simple as having pets might be against the rules, so be sure to look into this.
Every buyer has a unique set of criteria. In some instances, people need to have hardwood floors, others might desire multiple bathrooms, or have to have a finished basement. When considering home ownership, you need to iron out the details.
There are wants and then there are needs. As you begin your search by looking online or while watching HGTV shows, it’s imperative that you differentiate between things that would be nice to have versus those that are non-negotiable. Unless you build your own house, there are probably going to be things you have to live with that are tolerable. If you become fixated on having every single thing your way, it will be very challenging to find the right house. In contrast, identifying key desires while being willing to compromise on more minor things will allow you to narrow your search. This might seem counter intuitive, but there’s a sweet spot between being too picky and too uncertain. Find the happy medium and stick to your must haves.
Before jumping into the home buying process, you need to have answers to certain questions. By conducting preliminary research, you are putting yourself in the driver’s seat when you go to buy a house.