When buying your first home, there are no wrong questions—only questions you wish you had asked.
At least 8.3 million first-time homebuyers are projected to enter the mortgage market through 2022, according to analysis by credit reporting company TransUnion. With mortgage rates across the country dropping rapidly, it may be tempting to rush out and purchase what seems (at first glance) like your dream home, but resist that urge to act impulsively and ask these key first-time homebuyer questions before signing the papers:
1. How Much Home Can I Afford?
The logical first question homebuyers ask when beginning the search for a home is how much can you afford to spend. Aside from filling out a budget sheet to see what your true monthly expenses are, the best way to figure out which homes are in your price range is to get pre-approved for a mortgage loan. If you’re serious about purchasing a home, you will eventually need to get pre-approved anyway, but the process also solidifies exactly how much money you’re qualified to borrow, narrowing down your housing options.
When determining your purchase power, you should also factor in the various fees and costs associated with buying a home, such as:
- Realtor fees
- Mortgage insurance
- Homeowner’s insurance
- Property taxes
- Closing costs
- Any necessary renovations
2. How Much Are Homes in the Area Selling For?
By figuring out what other homes in the area are selling for, you can determine whether the property is reasonably priced or not. If you have a realtor, they will be able to give you this information, but you can also find home values on your own using sites such as Zillow or HomeReports.org. Having a good grasp of what the home is worth will help you negotiate if you believe the property is overpriced.
3. Why Is the Owner Selling?
Another way to pull up prepared to the bargaining table is to find out why the owner is selling. Learning they are in a hurry to sell will help you negotiate a lower price. Additionally, if you find out that they’re selling because of a decline in the desirability of the neighborhood or region, that’s good to know up front and may help you decide whether you’re interested in the property yourself.
4. How Long Has the Home Been on the Market?
A home that’s been on the market for a long time is likely due for a price reduction. Homeowners who have been trying to sell for a while are going to be motivated to sell because when homes have been on the market for too long, it gives the impression that something may be wrong with the property. Knowing this information up front can help your bargaining powers.
5. Is the Home Located in the Path of Flood or Other Natural Disasters?
With a rapidly changing climate, more homes around the country are going to be located in high-risk areas. If you’re interested in a home that is located in a flood plain or in the path of a hurricane or other natural disaster, you may have to pay for additional insurance coverage.
Using FEMA’s flood maps, you can find out whether a property you’re interested in is located in a flood hazard area. In order to protect your home from catastrophe, aim to buy enough homeowner’s insurance to completely rebuild if disaster strikes.
6. What Is the Neighborhood Like?
If you plan on settling into a home for the long haul, it’s important to figure out who your neighbors are going to be and what kind of atmosphere and amenities the area provides. Ask the seller for their impression of the neighborhood, but also see for yourself by taking a look around and asking those you come across how they like living in the area.
Check to see if there are any parks nearby, whether the area is pet-friendly, and which schools and area businesses are within walking distance. A quick internet search should reveal any crime statistics and commute times from the property to your place of work. Here are a few online resources to check out to get a better idea of the area you’re looking at:
What If I Have More Questions About Buying My First Home?
Getting the full picture of properties you’re looking at is essential. Working with a trusted loan officer along the way is a great way to make sure all your first-time homebuyer questions are answered and everything goes as smoothly as possible. To help you get a better grasp on how to navigate the home-buying process, connect with a radius loan officer today.