So you’re ready to buy a new home – congratulations! This is an exciting time and you probably have a million questions. To start, let’s focus on four important ones you should not overlook:
1. What’s Your Priority – Space or Location?
Is your heart set on a spacious home in the suburbs or a smaller property in the heart of the city? For the majority of homebuyers, size and location will play a major role in their home search. Large or growing families may need more space, while others may opt for a smaller home in favor of a lower price.
Determining your ideal space means prioritizing characteristics from amenities to atmosphere, and more. Is it important for you to be in a community among other young families with kids, and the playgrounds that come with it?
Justin Lavelle, Chief Communications Officer for online background check platform Been Verified points out that next to neighborhood safety, proximity to resources is an important determiner for many homebuyers. Ask yourself – how close is the home or neighborhood to schools, parks, hospitals, and shopping? Are the streets sheltered enough from major roads that the kids can ride their bikes and play outside? Or, if you’re a single urban-dweller, how close are the nearest restaurants, bars and public transport stations? These are all important things to consider when determining the space and location requirements your new home should meet.
2. What’s Your Offer Strategy?
A real estate transaction is complex and the bidding process can be intimidating. To get your new home at a fair price, prepare a bid strategy in partnership with your agent or broker. Research the sales trends of similar homes in the area to determine your opening bid.
For example, if your potential home’s current asking price is higher than the average sale price, you may be able to bid slightly lower. While most experts advise against dipping more than 10 percent below the asking price, you may be able to sweeten the deal by offering a quick closing or paying a larger deposit.
To learn whether your neighborhood is currently a “buyer’s market” or a “seller’s market,” research the average length of time area homes stay on the market and how many offers were made.
3. How Much Can You Really Afford?
When it comes to buying a home, it definitely pays to do your research. Ralph DiBugnara, president of Home Qualified and VP at Residential Home Funding in N.J., suggests speaking to a local mortgage banker to get pre-approved for a loan. In other words, find out how much you qualify to borrow, as well as the estimated monthly payment associated with the loan amount. According to DiBugnara, it’s also a good idea to get familiar with your credit report in order to, “avoid any surprises down the road.”
However, you don’t have to spend every penny you’re approved for. In fact, you probably shouldn’t. Too many buyers get hung up on the down payment and forget to consider ongoing costs.
For example, depending on your contract, you may be responsible for some or all of the closing costs. Other fees include inspection and appraisal fees, plus the potential cost of hiring an attorney to look over the contracts for you. You’ll also need to budget for the cost of homeowner’s insurance, and emergency repairs that pop up. To determine how much you can afford, keep in mind that your monthly mortgage payment should be no more than 30 percent of your monthly income.
4. Do I Still Need an Inspection Even Though I’m Buying a New Home?
The short answer? Yes! Paying for a home inspection is a drag, especially if you don’t end up buying that particular home, but it is a critical step and you should absolutely not skip it.
Even with a new home, spring for the inspection to help uncover any possible building issues with the foundation, plumbing, or other major systems. The inspection results provide bargaining chips you can use to negotiate improvements to be paid for by the seller. Anything that you discover after the sale of the home is your responsibility.