There aren’t many financial decisions bigger than the one to buy a house.
Any home purchase, no matter the price, will affect your personal life and financial circumstances.
With so much riding on your decision, it’s critical that you know exactly what to look for.
In this article, we aim to help you make an informed and confident decision. Let’s go over what to look for when buying a house.
What to look for in the house itself
You’ll have a long list of wants and needs when buying a house, but those aren’t necessarily the most important details. Instead, you want to focus on the following parts of any home you’re considering purchasing.
There’s nothing more important than a home’s foundation. If it’s cracked, crumbling, bowing, or suffering from any other type of damage, the entire home is at risk.
A home inspection can pinpoint problems by inspecting both the interior and exterior of the structure. For example, from the outside, an inspector will look for bulging or leaning to determine if there’s an uneven load.
On the inside of the home, they’ll look for things such as foundation cracks (if the foundation is visible), drywall cracks, and uneven floors.
On the plus side, a roof is something that you can replace. If a home you love has an outdated roof in desperate need of replacing, you can take immediate action upon moving in. You could even negotiate with the seller to replace the roof before the closing date.
On the downside, the average cost of a new roof is $10,000. Are you okay with paying that much money when you’ll have so many other projects on your to-do list?
A home inspector can look for signs of damage by climbing onto the roof and from the interior of the home, such as an attic space. They’ll look for signs such as missing shingles, cracked shingles, and wood rot.
Note: some home inspectors will not inspect roofs because they consider it a safety risk. Double-check this before you hire an inspector. You’re taking a big risk buying a house without having a professional home inspection.
Your home’s heating, ventilation, and air conditioning (HVAC) system is essential to living safely and comfortably in your new home.
There are two primary details to consider when inspecting an HVAC system:
- Past maintenance
- Age of the furnace and air conditioner
A home inspector or HVAC professional can help you determine if and how the system has been maintained. For instance, a clogged furnace filter is a sign that the system has been neglected.
As for the age, you can generally check the unit itself to see when it was manufactured and installed.
Other things to consider when shopping for a house
Fall in love with a house before you decide to purchase it. It’s a significant decision that you’ll want to be happy with well into the future. Aside from the home’s physical condition, consider the following factors.
You’ve heard it before: location is everything when buying a home. Search for homes in communities that are known for property appreciation. Search for homes in safe areas with good school districts.
This is also where you can rely on your real estate agent for support. Real estate agents should know the area they’re working in the best. Discuss your needs with them and they can help you narrow down an appropriate neighborhood.
Don’t forget about taxes when calculating your monthly mortgage payments. Annual taxes vary from location to location and are calculated by multiplying the mill levy by the assessed value of the property.
Not all homes are part of a homeowner’s association (HOA), but many of them are. Answer these questions before buying a home:
- Is the home part of an HOA?
- How much is the monthly HOA payment?
- Can you make the payment annually?
- How is this money used by the HOA?
- What happens if you don’t stay current with your HOA payments?
HOA fees can range from a few dollars per month to several hundred. Don’t let this sneak up on you.
How to prepare for the home buying process
Now that you’ve had the fun of house hunting and you know what to look for when buying a house, you can turn your attention to the process of buying a house. There are two basic steps you want to take:
1. Secure mortgage pre-approval
Contact one or more mortgage lenders to go through the pre-approval process. The end result is a pre-approval letter that shows you how much you can borrow. In other words “how much house” you can afford. This is useful as you make an offer since it shows the seller that you’re serious about buying and that you can afford the property.
The conventional loan is a popular mortgage among homebuyers. Discuss loan options with your lender to find the right one for you.
2. Collect documentation for your mortgage application
A pre-approval is a good start, but you’re still required to go through the many steps of the formal mortgage application process. Collect this documentation upfront:
- Tax returns
- Pay stubs
- Bank and retirement account statements
- Photo identification
- Rental history
- Gift letters
Note: your lender should provide a complete list of all required documentation.
3. Decide on a down payment amount
This may change by the time you close on your home, but it’s a good idea to know how much money you can afford to put down. If possible, shoot for a minimum of 20 percent. Doing so allows you to avoid paying private mortgage insurance (PMI).
Specific loans may require a minimum down payment, however, so be sure to find that out upfront. A larger down payment gives you more equity in your home right away.
Find what you want in a home with AAA Banking
With the help of the information above, you can now make a checklist of what you personally want to look for when buying a house.
If you’re ready to take the next step in the process, we’re here to show you the way.
At AAA Banking, our mortgage team is committed to providing safety, security, peace of mind, and industry-leading service.
While you’re searching for your dream home, lean on us for answers to your questions, professional guidance, and more.
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