What To Consider When Purchasing Your First Home
My eldest son is house hunting. This is a major purchase for him, and he wants to make a sound investment.
One frequent mistake of first-time homebuyers is to “over buy,” thinking their future salary will make the payments easier. Buy a house you can afford and will enjoy living in rather than one that will appreciate. Start with your personal financial considerations. Then start looking at locations and house condition and deciding on an offer price.
Personal financial considerations
My son started planning to buy a house when he graduated from college. Each month, he set aside money in a “down payment” account. He reviewed his spending and determined a comfortable mortgage payment that will allow him to still have some fun. That target, combined with his down payment, will determine the maximum offering price for a house. There is a separate pool of money for closing costs and any updates he wants to make.
One area that is often overlooked are the “home startup costs.” I am hoping I can help by pawning off my dining room furniture my parents bought when I was starting seventh grade. Given that he’s young, has friends but limited possessions, and has a dad with a truck, I think pizza and beer will cover moving expenses.
With a list of requirements and a budget, he is looking at homes in his price range. His first consideration is the location. Neighborhoods have their own personality. Consider where you spend time and if the location is convenient to work, church or schools.
It might be a trade-off between ideal location and affordability. How does the neighborhood feel? Are there a lot of families with small children, a mix, or mostly older individuals? If you have pets, is the neighborhood pet-friendly? Crime rates, noise levels and traffic congestion are also considerations. Is the house in a flood zone? It might be helpful to talk to neighbors and to ask the owner what they like best about living in the neighborhood.
In addition to location, the condition of the house is probably the most important consideration. Are you looking for move-in-ready or are you willing to put in some sweat equity to restore a home with good bones? Ignore easily replaceable items such as furniture and decor, and window, wall and floor treatments. Concentrate on red flags that might indicate significant challenges, including odors, water or pet damage; the age and condition of appliances, and the condition of the roof, electrical and plumbing.
Be aware that inspections might not turn up all the problems. My husband and I purchased our house during a dry fall only to find out the next spring that we had bought “Swamp Hahn.” Depending on the condition of the house, you might prefer to just keep looking.
Before deciding on an offering price, understand the full cost of getting a home “move-in-ready.” What are the costs to address any structural or cosmetic issues? What appliances stay or need to be replaced? If the house has been on the market a while, there might be room to negotiate or it might be a red flag. We are currently in a tight housing market, where sellers are routinely getting the asking price or above.
Buying a house is a major investment, not only for the lifestyle you want but also for all the headaches that can come with homeownership. Going into the housing search well prepared is essential. The housing market is extremely tight; there are more buyers than houses being sold. Prices have increased with the additional demand. Buyers might have only hours to decide to make an offer.
I have encouraged my son to keep looking but to be patient. He does not have to move and can wait for the right house in the right location at a price he can comfortably afford. This big of an investment takes time and patience.