Getting ready to buy a home

A home is a good investment because as opposed to renting you are putting your money into something that lasts for long time. In addition, the property may grow in value. This means when you sell the home in the future, you may get more money than you paid. Conversely, if the home values drop, you may loose your money. Lately, the economy is showing signs of the home values dropping and home owners losing money. But this is good for the buyer who can afford it because he can now get the property for less. However, if the prices drop further after the buyer has purchased the house, the buyer will loose money if he decides to sell it.

Buying a home can make or loose you money. Depending on what is bought and sold, money could be in thousands of dollars or more. Getting ready to buy a home is all about starting the home buying process for the right financial and personal reasons. Here we will present considerations deemed important for any home buyer to get started on home buying.

One good place to start is with the pros and cons of buying or owning a home. We included some of the advantages and disadvantages earlier but Table 1 shows you all.

Home buyer’s financial responsibilities

Certain responsibilities come with owning or buying a home. If you have a car, you know you needed (and need) to pay for the car registration fees, car insurance, gas, maintenance costs, and any loans. Similarly, when you purchase a home, you will need to pay for titling the home on your name, home insurance, mortgage, and so on. In fact, a home buyer’s down payment could just be more than a typical total cost of a car. So buying a home is a really big investment and dream for most people. Most of these people may not make a similar investment for many years to come.

It should be clear that buying and owning a home is a big financial reasonability. Consider these expenses as a proof of the big financial responsibility:

• Down payment – this is the money that the buyer pays to purchase the home. It is usually a percentage amount of the total cost of the home. So if the home costs $200,000, the buyer can expect to pay 3% to 20% or $6,000 to $40,000 as down payment.
• Closing costs – this is 3% to 6% of the total home loan. These costs include:
  • Fee to process the loan application
  • credit report fees
  • Mortgage insurance
  • Homeowner’s insurance
  • First property tax payments
  • Title fees
  • Costs to register and transfer the property
  • Home inspection and termite inspection fees
• Moving costs – this represent not only the expenses that the buyer will incur to move into the new home but also any repairs or upgrades needed in the new home.
• Continuous costs – these costs include property taxes, mortgage insurance, home insurance, interest payments, loan payments, and so on. These costs continuous because they are due each month (bi-weekly depending on often the payments is made). Maintenance costs, on the other hand, may be occasional but are part of owning the home.

Other considerations

Numbers alone probably do not influence every home buyer’s decision. There is more than just numbers. Factors such as transportation, shopping centers, schools, community (or neighborhood), and security also influence a buyer’s decision.

Transportation

When choosing a home, availability of the public transportation in the area cannot be missed particularly by those who rely on public transportation. Having a convenient distance to a public transportation is obviously desired because then the home buyer can conveniently shop, work, visit friends, and perform other activities long travel. Even if the buyer is not a regular user of the public transportation system, he/she should still check it’s availability in case it is ever needed.

Shopping centers

Having convenient access to favorite places is always desirable. The average person spends a good amount of time driving to stores in a week. Having reduced distance to the favorite stores means saving in gas, time, and money. If the stores are located within walking distance, then, driving is probably eliminated for most trips and people.

Schools

Buying an affordable home should not make good schools far for the buyer or his/her children. When the schools are far from home, it will take more time to get to and from the school. When you find a home you like, check how far it is from the nearest school.

Community (or neighborhood)

No one wants to move in a neighborhood that is place for crimes. Actually, if crimes increase in a neighborhood, the home values go down. So avoiding moving into those neighborhoods is probably best for any buyer.

Some websites even make it easy for you to check the crime data for a particular neighborhood. But don’t forget to go and visit the home if you really like. Visit the home at least once preferably at different times in a day (for example, morning and night) and different days of the week. The idea is to get a sense of the neighborhood and the people. Try talking to the people in the neighborhood. After all you will be living in that area.

What else should you watch for in the neighborhood?

• Watch for any new construction that is taking place. In general, when new homes, schools, parks, etc. are built, the property values go up in the area.
• watch for other houses on sale. If many houses are on sale and they are not selling, this means the property values will go down. Also, if more houses are on sale on same the street, you have more than one house to consider for purchase.
• watch for any houses that show sign of vandalism. If this is the case, you know what to watch for if you move in that neighborhood.

Asking the right questions

Before you head shopping for a home, make sure you understand the risks and potentials involved in what you are buying. It is a good idea to ask yourself these questions as part of getting ready to purchase a home:

• Am I sure to buy a home?
• Do I have a stable job and income?
• Do I know that I will stay in the new home (or area) for many years to come?
• Do I have any known major financial responsibility on the horizon? (i.e., child going to college in a few years, medical expense, etc.)
• Am I able to pay to my creditors on time?
• Do I have good credit history?
• Do I regularly save?
• Do I have a budget?
• Do I have saved any money for down payment, or closing costs?

Answering no to any one or more of these questions, the average potential home buyer is not probably ready to purchase a home at this time. Answering yes to all of these questions indicates the potential buyer is ready to begin the home purchase process.