Most of us were raised to get an education, start a career and buy a home.
So you find yourself having finished your education and happy in the resulting career. The next step, logically, is to buy your first home.
Before you pull up Craig's List and start hitting the Sunday Open Houses, there are a number of things you should consider. Most of us think that the number of bedrooms and the location are the big decision factors, but there is a lot more thought that needs to go in to such a large investment.
This is list is not intended to be everything you should think through, but it will get you started on the right path.While the list is geared mostly toward first-time buyers, these are things that every purchaser should consider before buying a new home.
- How much do you have in Savings? How much do you owe? I was watching a show with Suze Orman the other day and she made the point that if you have money in savings, but you owe more than that in credit cards and student loans, you don't really have anything in savings--that money is all owed to someone.
- What are you willing to sacrifice to buy your new home? You may love the great location of your apartment, close to public transportation and the night life. Chances are very good that you will not be able to go from a rental in a great location to a comparable home in the same location. Most people will have to sacrifice either the great location or find a smaller place. Which is more important to you?
- What are the maintenance expenses associated with the type of property you want to buy? With a condo this is easier to calculate. All of the outside maintenance is handled by your condo fee (but, yes, you must pay the condo fee, so it is not without cost). You will be responsible for the inside appliances and systems, flooring, walls, plumbing, etc. A townhouse generally will require you to maintain the outside (house and yard). This includes replacing rotten trim, installing new windows, replacing the roof, mowing the lawn and everything else outdoors. The detached home is similar to the townhouse but with more yard, more exterior surface, more interior surface. These costs can really add up and the cost of ignoring these improvements can be quite high. In each of these types of property, you will have responsibility for the appliances, plumbing, electric and internal surfaces.
- How will your commuting expenses change? If you move further out, you will use more gas, possibly pay tolls and put more wear on your car. If you have a car lease, you could end up spending a lot of money to cover that extra mileage. Spending more to get to work each day may seriously impact your monthly expenses.
- Are you a 'do-it-yourself' type or will you need to hire help? This goes for maintenance, yard work, cleaning and improvements. How much time are you planning to put in to your new home? If you would rather spend your free time relaxing, will you have the resources to pay someone for help after buying your new place? The bigger the place, the more there is to clean (and maintain).
- Is your desire to buy property based on what is best for you or based on what you think is best for you? If you have a job with a lot of travel, do you want to come home at the end of each week to take care of your new home? Some people find that relaxing. Others do not. Which type of person are you? Do you plan to stay in the area for a long time, or are you just here for a year or two?
- What is your Five Year Plan? You should not buy a house that you cannot stay in for at least 5 years. If your 5 year plan includes starting a family, which is more important: the extra bedroom or the built-in TV with surround sound in the family room ? If you are downsizing, is the 3-story walk-up condo the best best or should you think about a first floor unit or one with an elevator? Do you have family that visits from overseas for extended periods of time or a child that lives with you during the summer? These are all considerations when deciding what makes one property better than another.
I hope that these questions have got you thinking about your new home purchase in a productive way. There is so much more to buying a new house than identifying a property and signing the mortgage papers.
Thinking through these issues before you buy will hopefully go a long way to make you a more satisfied purchaser and a happier homeowner.
For more things to consider before buying a new home, go to A Fresh Look At Buying A Home, Part II...