Thursday, March 10, 2011

Home Sweet Home

Although we are far, far out from our summer move, my mind reels with the minutia of the homebuying process.

Bedrooms, bathrooms, square footage, lot size, and of course: location, location, location.

But there's more to buying a house than just the fun stuff.

It's WORK.

And this work is reviving memories of our previous home-buying experience.

It was less-than-stellar, and because I love both my readers, I am here to help you learn from our mistakes.

  1. Use an agent.  Never use a double agent.  Your agent should represent you and only you.  If you use an agent who represents the seller too, consider who is paying them.  THE SELLER.  So do you think they will really have your best interests at heart?  Hmmm?   A good agent can make this an enjoyable process, while a bad agent will make you want to rip your eyelashes out.  
  2. An agent should be willing to work within your parameters.  If they are showing you houses that are $20,000 above what you want to pay, are they doing you (and your checking account) a disservice?  Oh and PS - just because the mortgage company approves you for a maximum amount of money doesn't mean you have to home-hunt in that range.  
  3. Don't trust the pictures.  I have looked at a lot of houses that look cute & charming online.... and not so much in person.  Do your homework, take measurements, drive around, talk to the neighbors.  And don't think that just because the neighbors say the broke-down '85 Vanagon parked on the side lawn is going to be towed next week... that it actually will be.  
  4. It's more than the mortgage.  You MUST factor in PMI, property taxes, and homeowner's insurance.  This can EASILY add another $150-$350 a month to your mortgage.  This mortgage calculator is a great way to estimate what you'll actually pay each month.   
  5. And then.... don't forget about gas, electric, water, sewer, and garbage.  Maybe as a renter you've paid some of this.  Or perhaps you've never paid for any utilities.  But moving from a 2 bedroom, second floor apartment with gas paid into a 1,500 square foot house with no attic insulation will be a shock to your budget.... especially if you live in snowy climes. It never hurts to ask to take a peek at a gas/electric bill from January or February.  Better than a brain bubble induced by a $300 gas bill.... right after Christmas.  
  6. Closing costs can add up fast.  Sure, you can sometimes ask the seller to take on some of the closing costs - if your mortgage allows that.  Or you can roll them into the cost of your mortgage.  But some things must be paid up front - such as earnest money, inspection costs, and appraisal fees.  Budget for them.  Then add 20%.  This is a great list of items within closing costs.  
  7. Don't drain your savings for the down payment.  If you can fork over 20% so you don't have to pay PMI, that's great.  But if you don't have the 20%, don't spend every penny before you even move in.  You still want a buffer. 
  8. Ask for a home warranty.  This will cost the seller about $350, and gives you the security to know that if your furnace/water heater/ fridge dies 2 months after you move in, you are not stuck with the full replacement costs.  
  9. Negotiate.   Hate the wallpaper?  Love the playset?  Think the butcherblock island is perfect right where it is?  If you don't ask, you have no idea if the seller is willing to include it with the house. 
  10. Are appliances included? Yes? No? Some?  Budget for a refrigerator, stove, dishwasher, washer, and dryer.  You can craigslist them, but you takes your chances.  And shiny new appliances will again add thousands to your homebuying investment.  
  11. Did you buy a house with a living room, family room, formal dining room & eat-in kitchen?  Do you have furniture to fill them?
  12. It is really easy to become emotionally invested.  Don't.  You will make poorly-considered decisions, and have REGRET.  It's a house.  It's not a home until you move in. 
  13. The tax write-off is worth it.  


sarita said...

Thank you!! I don't know if we will be buying or renting during residency, but I really appreciate all the pointers! Good luck!

Becky said...

This is such a great list- things that we found out buying a house several years ago. One I would add is be wary of the first time homebuyer's tax credit - - especially if you aren't 100 percent sure you will be there for the three year period needed. Keeping the house and renting it out doesn't help you either. When we go to buy a house again in the future- I will have to refer to your list again! There were a couple of things I didn't think about last time . . .

Forever Changed said...

Ohhh sooo helpful! Thanks for the advice! Hopefully one day Jon and I can get a house and I will totally come back to this article!