This new home buying checklist is a list of considerations – both goals and limits – you should take into account before buying a new home. Being able to answer these questions will help you prepare for the home shopping and purchasing process. The more defined your answers are, the easier it will be for you to find the right kind of property to suit your needs. There may be other things you will need to consider along the way, depending on your specific circumstances, but these should get you started.
New Home Buying Checklist
1. What resources do you value most?
In general terms, this means defining your home criteria, as well as the acceptable locations. How many bedrooms do you think you need? Do you prefer living in the heart of the city, or on the outskirts? The perfect home rarely exists in real life, so try to decide now on what areas you can be flexible in. Would you be willing to settle in a fixer-upper if the price is more affordable? Would you take a home further away from your job, or even in another state, if it meant being able to afford that extra bedroom and a bigger yard? If this is going to be an investment property, look at the neighborhood and assets the same way you would as the type of potential buyer or renter you plan on trying to attract.
Location and access to resources can also seriously impact the bidding process, as well as the types of mortgage loans you can qualify for. You should ask your agent (or do some research online if hunting for yourself) about the competition in the area. How many bids do neighboring properties typically receive? What do they generally sell for? This will inform you as to how aggressively you’ll need to make your offers.
2. What can you reasonably afford?
This means not only taking your mortgage payments into consideration, but insurance, taxes, down payment, repair costs (if any) and other fees. If you need help figuring this out, don’t be afraid to ask an expert for some advice. Many mortgage professionals are happy to give you some insight on the types of loans you qualify for and what your basic costs will be for free. A loan or mortgage calculator can also be an invaluable tool for figuring this out. Take into consideration that there are different types of mortgages. Some may come with no (or a low) down payment but require mortgage insurance, which will be an additional expense every month.
3. What kind of mortgage loan do you qualify for and how does this shape your home criteria?
Some loan options make stipulations regarding the size, expense, or location of the property. For example, RHA loans require that you buy in specifically ‘rural’ zoned areas. Moreover, most loans have requirements and limits regarding the loan to value ratio (how much your home is worth vs. the amount of your loan). You’ll want to at least come up with some ballpark figures for your loan limits before looking for properties. As with Step 2, asking an expert or researching different types of loans can be very important (we provide some information about loan options here). You need to have a good expectation as to what you qualify for, and what the bottom line will be for your pocket when all is said and done.
4. How long do you plan on staying in the home?
This isn’t really important for investors, but it can make a huge difference to first time homebuyers. Is this a starter home that you will potentially be moving out of in a number of years? Or is this a home you can see yourself staying in for 20 years plus? How long you will live here can drastically affect the type of loan option that will best suit your goals.
Once you know your answers to the questions posed in this new home buying checklist (or a rough estimate- no need to get crazy just yet!), you’re ready to start looking for the right property to suit your needs. But where do you turn now? Where do you begin your search? Do you need an agent now or later (or never)?
The mass of houses available and posted throughout advertisements and media, especially online, is tremendous, and can seem overwhelming at first. Having an agent can be helpful in the home hunting process, but it’s an additional expense. On the other hand, without an agent, do you know the proper steps for appraising the property, for acquiring the proper documentation, or researching the home’s history? To find out more about real estate agents and how to find one that will serve your interests, move on to Step 2.
Step 2: Finding the Right Agent for You
Otherwise, proceed straight to Step 3 to learn some of the tips and tricks to hunting for homes online and in person: How to Find a House to Buy That Fits Your Needs