Purchasing your first home is a milestone. It’s right up there with graduating college, getting married, and having kids. Oftentimes, first time home buyers get so caught up in the romance and grandeur of purchasing their first home that they forget about some of the most important details. But, just like the other milestones mentioned, it’s a major step, and a decision that should never be taken lightly.
The most important thing is figuring out what kind of home you’re looking to buy. Are you looking for a starter home, or are you interested in growing old in whatever you purchase?
“Since you’ve never owned a home before, most real estate professionals and seasoned homeowners would tell you to purchase a starter home,” says a blog post from Green Residential. “That way, you can get your feet wet, learn about what home ownership really involves, identify the elements you truly want in a home, and upgrade at some point in the future.”
As you begin your search for the perfect starter home, here are some very important things to keep in mind:
1. The Down Payment
Currently, the average price of a starter home is $189,300. That’s pretty low as far as house prices go, but it’s enough to stretch the budget. You’ll need to have a down payment for the home in order for the bank to lend you the rest of the money.
A lot of banks require a payment of 10 percent of the home’s value up front. If you have bad credit, you might be forced to put down as much as 20 percent. For the average starter home, that means you’ll need to have saved up between $19,000 and $40,000 before purchasing your house.
2. Location Trumps Style
Your first priority should almost always be your location. For the majority of home buyers, it’s much easier to deal with a smaller bathroom, yet being close to work than being in a high-crime neighborhood with an hour commute.
You can always change aspects of your home that bother you, but you can’t uproot your home and more it somewhere else. Don’t waste your time looking in a neighborhood you dislike.
3. The School District
Many first time buyers don’t think about the school district because they don’t have kids or their children are very small. However, school districts are more important to the home buying decision than you might think.
“All other things constant, a good school district tends to equal a good neighborhood,” says a blog post from Public School Review. “Great location can mean safer neighborhoods, abundance of places to eat, ease of access to transportation, proximity to urban, beach or vacation areas, and amenities like public parks and services.”
In short, when you live in an area where the school is highly ranked and popular, it raises property values. You’ll be looking at higher priced homes, as well as a higher quality neighborhood. The opposite is true for areas where the school district is considered sub-par.
4. Pre-Purchase Inspection
Always do a pre-purchase inspection. Even if the realtor and previous owners are extremely friendly and have all the paperwork in order, it’s easy for little mistakes to go unnoticed, costing you big down the road.
Major aspects of the home – including the roof, plumbing, electrical work, siding, windows, and insulation – are the biggest concerns. A certified inspector can detect bigger problems, such as pest infestation, mold, or a roof that’s near collapse.
Once the inspection is complete, you can use the information during negotiations to get a better deal on the home. Some things will need to be fixed right away, and you want the current owners to pay for it.
5. The Home Owner’s Association (HOA)
Some neighborhoods don’t have an HOA, but if yours does, you want to know what you’re getting into. HOAs are great for keeping properties looking nice, but that can turn into a lot of work that you might not be able to handle.
There are also fees and legal restrictions associated with HOAs that you’ll want to know about before placing an offer. Reading through a stack of legal papers might be the last thing you want to do, but you’ll be glad you did when it saves you hassle on buying your first home.