6 Questions Every First-time Home Buyer Should Ask Themselves
Are you a first-time home buyer? Chances are you’re entering the market less prepared than you may expect. Before jumping headfirst into your house hunt, it’s important that you’re asking yourself all the necessary questions, so you have a realistic picture of what to anticipate and know exactly how to tackle any challenges that arise as a newcomer.
Are you Prepared to Make Sacrifices? As a first-time home buyer it’s important to realize that your first home doesn’t always equate to your dream home. You should therefore prioritize what’s most important to you before beginning your home search. For example, you may have your heart set on a popular neighborhood where smaller homes list for higher prices. In this case, you’d ask yourself whether spending more for less space is worth securing a home in that neighborhood. Or would it be more pertinent for you to offer on a larger and less expensive property in a surrounding area with less demand. You don’t want to wind up with buyer’s remorse months down the line because the home you chose doesn’t match your lifestyle. If you’re the type to enjoy entertaining, maybe a larger home in the suburbs with a plenty of space for hosting is the home for you. However, if you spend many evenings and weekends out with friends, a condo in the city where you can enjoy the nightlife would be the best fit. These are just some examples to take into consideration, but there are plenty of questions to ask yourself in regard to how your day-to-day lifestyle and that of your family will play into what kind of home and area is right for you. You might determine that building a home from the ground up is the best answer to get exactly what you want. But again, you’d have to ask yourself if the additional labor, renovation costs and time are worth it. Only make the decision to offer on a home if it suits your top priorities.
Are you Ready to Financially Commit? The expense of home ownership can certainly add up to more than what a buyer may expect, so it is important to evaluate your finances and ensure you can indeed afford this newfound and lofty commitment. A general rule of thumb is to not spend more than 30% to 32% of your gross annual income toward mortgage expenses. You’ll have to also factor in additional monthly payments including property tax, homeowner’s insurance, bills, etc. Another concern is saving for a down payment. Your down payment shows the seller that you are serious about the transaction. It also gives you more power in the negotiation process. That’s why it’s important to take the time to save. Being patient is difficult, especially if there’s an opportunity you are compelled to jump on right away. Though it’s never a good idea to make an offer without first securing the proper leverage. Don’t make the move before you’re truly ready and have the funds to back you up.
Have You Done your Homework on the Area? You wouldn’t purchase a car without knowing its history first. The same can be said for the neighbourhood you plan on moving into. It’s not unreasonable to reach out to locals and ask them about their experiences living in the area and whether or not it’s been positive. Dig deep and do some research to see if there are any elements of the neighbourhood that could positively raise your properties’ value or adversely hinder it. For instance, securing a home in a neighbourhood with a highly sought-after school district would likely raise your property value for resale. On the other end, proximity to contentious neighbours, noisy train tracks or smelly industrial factories are likely to hurt your property value and taint your overall livelihood while residing there. Know exactly what you’re getting yourself into before making an offer. If an offer seems too good to be true, there is probably a reason for it.
Have you Overlooked any Elements of the Inspection? Be sure to inquire about any flaws in the inspection no matter how trivial. Some issues may seem easily fixable and hardly a deal breaker for you. Though it’s important to ask the right questions and inquire further about these issues to avoid uncovering any larger underlying problems that don’t appear immediately obvious. If renovations have been made to the home, check to make sure they have been performed by a licensed professional and that nothing is amiss or misleading. Don’t be afraid to ask the appropriate questions when it comes to an inspection. This will save you a lot of hassle down the line.
Are you Prepared to Offer More Competitively? Many first-time homebuyers aren’t prepared for the competitive nature of bidding wars and will sometimes low-ball their offers only to be disappointed when it gets turned down. If you’re finding your offers are consistently being rejected, it’s likely they just aren’t aggressive enough to stand up against those who are willing to offer a higher bid. That’s not to say you should be offering far more than your reasonable budget, but a minimum bid should at least meet the asking price and many cases will often surpass the asking price if the home goes into a bidding war. Keep in mind you may have to compromise on your budget and give a little more to secure the property you desire.
Have you Set Aside Funds for Renovations and Upgrades? You don’t necessarily have to buy a home that’s maximizes your entire budget. Rather, consider offering on a home with a lower price point and allocating some of your additional funds toward renovations, upgrades and decorating. Building these costs into your budget before you make your purchase will give you more flexibility to transform the home into exactly what you picture.
There are 6 important questions every new first-time home buyer should ask themselves before entering this competitive real estate rat race! Have additional questions? I’m here to help!