Searching for just the right home can be very exciting. You may plan ahead for the number of bedrooms and bathrooms that you want. Or imagine preparing for dinner parties in a sun-filled kitchen. Although these things are important, there is more to a good home purchase than the rooms it contains. Following are just a few suggestions to consider. Take some time to make a list and determine which additional priorities are important to you.
Survey the neighborhood during many different times of the day and days of the week. Are you comfortable with the noise, activity levels, traffic volume, etc.?
If you have, or plan to have children, check with the local school board about the neighborhood schools. What is the student/teacher ratio? How are the test scores? How involved are the parents? What programs are available for students? What credentials and how much experience do teachers bring to the task?
Is the foundation of your new home sound? Is it well built?
Are the existing appliances sound or will they need to be replaced?
Are the home’s major systems such as electricity, plumbing, heating/air, and roofing in good condition?
Is the home energy efficient?
How much major and/or cosmetic work will be required?
What will your commute look like? If possible, do a trial run during rush hour.
What is the crime rate?
What permits have been issued for new projects and/or construction in your new neighborhood?
Will you be expected to pay homeowner association fees? Are you comfortable with the covenants set forth?
Does the neighborhood provide sufficient recreational opportunities?
Will you be moving into a home or joining a community?
Is the local grocer clean and well-stocked?
Enlist the help of a good real estate agent, reputable home inspectors and others to help find a home with more than just a pretty face.
Beyond Mortgage Payments
Owning a home involves far more than keeping current with your mortgage payments. There are a number of costs associated with home ownership that extend far beyond the basics (i.e. principal, interest, taxes and insurance). Assuming responsibility for these costs can be a big financial adjustment. This is particularly true if, as a renter, you are accustomed to responding only to fixed expenses (i.e. rent) without much concern for variable expenses (i.e. broken pipes and new water heaters). Well, now you are the landlord and it is up to you to handle the mortgage, in addition to all of the variable expenses of home ownership.
Routine and emergency maintenance issues are an inevitable part of homeownership. The dishwasher will need to be replaced, the roof may begin to leak, or the furnace will give out. You can minimize the financial fallout by planning ahead and budgeting in anticipation of these expenses. Recommendations vary, but you would do well to save an amount equal to at least 2% of the cost of your home for annual upkeep and maintenance. Set aside funds toward this amount each month. In this way you will eliminate the scramble and panic of getting the funds together to get that tree off of your roof.
In addition to maintenance and upkeep, there may be other costs you will need to absorb. These include water, sewer and sanitation expense; homeowner’s insurance, and property taxes. It is important to understand the full cost of home ownership before you sign on the dotted line. You can build confidence in your ability to handle these new expenses by making a trial run. Do your best to estimate the total cost of home ownership. Use that information to make a budget. Before you sign on the dotted line, live within that new budget and see how well you manage. You may find that you have adequate financial resources, that’s great. If you find that you are a bit short, you may need to make some adjustments. Being proactive now may help you avoid foreclosure in the future.
Nicole Soltau is the President and Founder of CreditUnionRate.com
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