As a home buyer, you may focus too much on a home’s sale price. You question whether or not it’s in your budget, if it fits your bedroom and bathroom requirements, and if it’s in the right zip code. Before you begin the home search, make sure that you take into account other factors such as your own credit. This is often an overlooked factor for first time home buyers. When you pay off outstanding loans and reduce debt before beginning the process of looking for a new home, you can significantly impact the interest rate you will pay and whether or not you qualify for a loan. Every little bit of debt you have will decrease what you qualify for.
Cost of a Home Beyond the Sale Price
Mortgages themselves commonly involve additional costs you may forget to account for, such as mortgage insurance. Other notable expenses include the property size, location, and condition of the home. These are some of the factors which determine property taxes and maintenance expenses for the upkeep of your home. While a home in good condition may have few repair costs at first, any home is a sufficiently large and complex structure and repairs are inevitable. There might even be costs that you don’t think about such as replacing the roof, having to re-do the electrical, or even natural accidents such as a surprise flood. Focusing too much on sale price of a home can also lead you to make an unwise decision based on your personal needs. You may become so focused on jumping on a good deal that you overlook whether a home is right for you. Maybe it’s an REO property that needs a lot of work, and you really wanted to have a move-in ready home with very few fixes. If you have a growing family, take into account the need for more space in the near future. In contrast, be aware that a large home for a good price may be larger than you can reasonably use. Also think about the amenities that it comes with. Sure, the home may be a great deal and have a pool, but the pool is extra maintenance that you will have to pay for down the line.
Investigation and Closing with Your Real Estate Agent
You may want to have your real estate agent show you homes within your specified price range without telling you each individual property’s list price. This can help you make an unbiased assessment of the home and help you avoid a hasty decision for or against a property simply because of price. When it comes time to negotiate and close a deal, keep in mind the closing costs and the cost of moving into a new home. These additional expenses might include renting a van, hiring movers, buying new furniture, replacing old items and limited repairs to rooms like the kitchen or bathroom. Closing costs cover administrative fees, title searches, and in some cases, initial homeowners’ association fees or inspection costs.
All in all, you should never purely focus on the price of a home. You need to take into account if it fits your needs, is something you can maintain, and is something you actually can imagine yourself living in for the next five plus years. You don’t want to end up with something that you thought was a good deal, but you end up being unhappy with.