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 For many of us, buying a new home is a frightening experience - especially if it's our first home. If we think about anxiety as simple formula where the unknown is multiplied by the importance, we've got both those elements at work here.
Home Buyer's Anxiety
We're never completely sure about the home's condition, the neighborhood, and our new commuting time to work - there are lots of unknowns. Multiply that by the amount of money and commitment we are making to a new home and we've got lots of anxiety at play.
So if we can agree that buying a new home will cause us a lot of anxiety, then we can take steps to help control that feeling. Admittedly, if you look at our formula, there is not much we can do about the importance of the decision. However, there is quite a bit we can do about the unknowns in the equation.
Home Ownership in America
According to recent figures, roughly 70% of Americans own their own home. That's the highest rate of home ownership ever reached. That's because many Americans understand that a home is an asset, and an investment in your future and that of your family.
But knowledge is the key to home ownership and removing the anxiety associated with such a large and important decision is important. We're going to outline some steps you can take to remove some of those unknowns and make you feel a little more relaxed with the subject of buying a new home.
Beginning the Process of Buying a Home
So how do you know if you're really ready to buy a home? Well, if you've got a steady source of income, you've been doing a good job of paying your bills on time, and you're able to save some money each month then your half way there. If you've already been paying rent or you've done some preliminary calculations to figure out if you can afford a mortgage, then you're probably ready to buy a home - at least financially.
Owning Versus Renting a Home
There are very few advantages to renting a home versus buying a home. If you're renting, then you don't have to worry about unexpected maintenance costs - that's about the only advantage you get. On the other hand, buying a home gives you the change to build equity, protect yourself against increases in rent and Uncle Sam provides you with a tax benefit too.
But owning a home also comes with a lot of responsibilities. You've got property taxes to pay, homeowner's insurance and maintenance costs. But unlike paying rent, making that monthly mortgage payment is like making an investment in your home and there is a certain amount of satisfaction and pride that homeowners get with the security of living in a house they own.
Qualifying for a Mortgage
On of the first things you need to figure out is how much home you can afford. Many lending institutions will examine your income and expenses and calculate how much you can afford each month - for free. If you want to get a rough idea, check out our section on mortgage calculators.
Generally, lenders use two rules to figure out how much you can afford. One formula looks strictly at your gross monthly income, the second looks at all of your existing monthly expenses - such as existing loans. By approaching a local bank or lender and figuring out how much you can afford, you've already eliminated one big unknown.
Finding the Right Community
Before you run out and start working with a real estate agent, you should have a pretty good idea of the type of community in which you'd like to live. Is the city life for you, do you like the though of living out in the country? What are the things you'd like to have available to you in your community.
For example, if you're thinking about having children, then you might want to take a close look at the quality of the school system or the recreational activities offered in each town. You should also think about neighborhoods themselves. It might be great for you to get away from all the hustle and bustle and live in the woods, but will other members of your household feel isolated and lonely?
You also need to think about things like your commute to work. Is mass transit available in the townships you're thinking about? Is the commute much longer or shorter than what you're used to already? Are there adequate retail stores nearby or where is the nearest grocery store? What's the town's public library like?
Once you've figured out what is important to the people that are going to be living in this new home, then its time to start working with a local real estate agent to help you choose several target communities.
Real Estate Agents
Picking a good real estate agent can mean the difference between landing the right home and missing out on a great opportunity - especially in a hot real estate market. You might want to start your search by asking friends or family if they can recommend a local agent. When you meet with an agent, make sure they are listening to your needs and not trying to sell you something you really don't want. Good agents are good listeners - they all can talk your ears off.
It's important to work with someone as close to the community as possible. The ideal agent has contacts throughout the town or city and knows about homes that are going up for sale before they've even been listed. Make sure you feel comfortable with the agent's approach and don't feel pressured. You also need to make sure they are doing their work for you, answering your question about school systems, traffic patterns or other items of importance to you. Let them help you remove those unknowns.
Picking out a New Home
At this point, you should have a good idea of what you can afford, the type of community you want to live in, and you're making the real estate agent(s) earn their commission by gathering up other information you'd like to know about the towns you're targeting.
One of the first things the agent will want to know - right after how much you can afford - is what type of neighborhood or home you'd like to see. This is where you'd like to set some minimum conditions for the home itself. How many bedrooms do you need? Do you want a bathroom on each floor? Does the master bedroom have to have its own bathroom? Do you want a working fireplace? Does the home have its own well water or access to sanitary sewerage systems?
Some people want to live in a certain style of home; it's the home's curb appeal that's important - colonials, Tudors, split levels, bi-levels. If you're not sure what each style looks like, have the agent drive you around and show you an example of each.
Evaluating a Potential New Home
When evaluating a new home, you should be looking for certain features of the home. Some of which will be obvious, such as the number of bathrooms, but others are not immediately apparent, such as the energy efficiency of the home itself.
Generally, when walking through a home you will want to be looking for certain features such as:
- Structural Soundness of the Home - Are there squeaks, leaks, cracks?
- The home's exact features versus your wish list - the number of bedrooms and baths.
- Size of the Lot - Do you want a lot of room to run around? Is maintaining a large yard a chore or a chance to escape?
- Layout of the Home - Do you like the home's floor plan? Will your furniture fit in the new home? Is there enough storage?
- Condition of the Home - Are the major appliance new or in need of immediate replacement? What's the furnace look like? Does the home look like it's been maintained and updated or has the owner recently put a new coat of paint on the ceiling to cover up a leaking roof?
Asking Questions about a Home
If you see something that doesn't look just right, don't be afraid to ask questions. Talk to the agent about the neighborhood. Does the basement fill with water during a downpour? If you see fresh paint on ceilings, then ask about the condition of the roof.
There is a certain game that goes on when buying a home. If you don't ask the question, then no one is obligated to disclose certain things about the home's condition. And don't count on your real estate agent to help in this area. Remember, they are paid by the person selling the home. So no matter how friendly they seem to you, they are really obligated to keep the seller's best interests in mind. But if you ask the right questions, then they are obligated to disclose that information to you.
At this point, you have enough information to help you find the right home. In our next article in this series we are going to talk about inspections, negotiating offers and closing on a home.
About the Author - Buying a New Home
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