Buying a house is one of the most rewarding experiences you can have, provided you’re prepared and know what to look for in a home. From preparing your finances to watching for red flags, here are some things to look for when shopping for your new home.
Look at Your Finances First
Before setting out on the house-hunting journey, looking at your financial situation from a realistic perspective is essential. You’ll have to come up with a lot of cash out-of-pocket for your earnest money deposit, down payment, closing costs, and moving expenses, not to mention unforeseen expenses like emergency repairs or time lost at work.
Your earnest money deposit is about 1-3% of the offer price and is due when you submit your offer to the seller. These funds go into escrow until closing.
Your down payment is approximately 20% of the sales price, depending on the type of loan you receive.
Closing costs typically run between 2-8% of the home’s sales price and cover things like lender fees, appraisal, inspection, property taxes, homeowner’s insurance, and other expenses of purchasing real estate.
You’ll also need to ensure you’ve got a solid credit score before applying for your home mortgage loan. Your score should be 620, at the very least, for a conventional home mortgage loan. The higher the score, the better the chances of getting approved and the lower interest rates you’ll receive.
Look at Lenders Next
After you’ve prepared your finances and credit, getting pre-approved for your home mortgage loan is imperative. Pre-approval is essential because it sets a realistic budget for you, lets the seller know you’re prepared to buy, and expedites the process since you’ve already completed your application. A seller may accept a pre-approved offer over one that still needs to secure a mortgage loan.
Shop lenders to gauge their lending fees, interest rates, and closing costs; don’t just pick the first lender you’ve investigated. Exploring several lending options could save you thousands of dollars in the long run.
Look for a Real Estate Agent
A real estate agent will save you time, money, and a lot of frustration. First, they’ll help you define your wish list, separating your “must have” items from your “like to have” items. They’ll also educate you about home values in the areas you’re interested in so you don’t waste time looking at houses outside of your budget.
Next, your agent will find and show you homes that match your criteria, walking through each property with you to show you its features and point out any red flags.
Once you’ve found a home you love, your agent will help you draft and submit an offer and negotiate terms if necessary.
They’ll also explain contracts to you and manage all of the paperwork. And they’ll walk you through the steps of closing on the home, which involves the appraisal, inspection, and more.
As a bonus, you won’t have to pay out-of-pocket for a buyer’s agent. The seller’s agent compensates the buyer’s agent, so nothing stops you from working with an agent you can trust.
Look for a House in the Right Location
It’s crucial to consider the location because that’s the driving factor in the prices of homes for sale. The closer you are to high-quality schools, parks, shops, entertainment, and recreation, the more expensive the house will be. You may find a small place for a high price near amenities, but find a larger home at a lower price if you shop further away from these resources. Consider your needs for location before you shop for homes.
Look at the Floor Plan
You can easily change some things in a home, such as paint colors or flooring, but altering a floor plan is an extensive, expensive undertaking. Make sure the house you need has the floor plan you want, including the correct number of bedrooms and bathrooms. If you’re looking for an open, spacious floor plan, it won’t make sense to buy a home where the rooms are boxy.
Consider the Yard
Do you need a big yard for kids or pets to play in? Would you prefer a house with a small or no yard so you don’t have lawn maintenance and landscaping? You’ll not likely be able to expand your property to add a yard if a house doesn’t have one. On that same token, if a property has a big yard and you’re not ready to maintain it, that might not be the house for you.
Red Flags to Look For
Water stains: Water stains on the ceiling could indicate a leaky roof. Water stains under cabinets could be telltale signs of plumbing issues. The same is true with standing water.
Cracks in the walls or ceilings: These can range from hairline fractures to wider, more serious ones. If the cracks are in an area that’s exposed to the weather, like a foundation or exterior wall, it could be evidence of structural damage and should be checked by a professional.
Mold: Mold is often associated with moisture problems and musty smells. It can be a health hazard and should be addressed immediately.
Electrical wiring: Look for worn wires, faulty outlets, and outdated wiring. Overloaded circuits can lead to fires and other dangers.
HVAC system: An old or inefficient HVAC system could require costly repairs or replacements down the line. Check the age and condition of the system and any ductwork.
Windows: Old windows can be drafty and inefficient, leading to higher energy bills. Check for signs of rot or drafts that may require replacement.
Foundation problems: Signs include cracks in walls, uneven floors, sticking doors or windows, and bowing walls. Foundation damage can be expensive to repair and should be looked at by a professional.
Conclusion
It’s fun to dream up all the details you might find in your perfect home, but it’s crucial to look past the curb appeal and pretty parts and seek out signs of damage. It’s also vital that you get your finances in order and secure funding before you start the house hunt. And to ensure you have the best experience with house shopping, work with a qualified real estate agent who can help make your dreams of homeownership come true.
