This is probably one of the hardest pieces of advice to really follow. But, here is the reality – purchasing a home is the single biggest financial transaction that most people will be a part of in their entire lives. Take a moment to let that sink in…
Part of the whole “American dream” is home ownership. Owning a home is also the single biggest source of wealth for most families and it is often either assumed or planned that the eventual sale of your home will provide a tidy sum to be used later in life or to move to another property.
With all of this being true, you have to step outside of your emotional self and think at least somewhat rationally about the whole thing. Having the perfect yard or updated kitchen or master bathroom will be of little comfort if you end up buying a home that has major problems! There is not enough granite or stainless steel appliances in the world to be able to make up for having to have your entire facade torn off and redone or if you find yourself living in a home with toxic mold that must be remediated.
The amount of mortgage you can get approved for is not necessarily actually affordable to you. Realtors will also push you to your upper limit of affordability and beyond. If you have ever watched an episode of some kind of house hunting show on HGTV you would see just how often realtors take their clients to homes that are above what they have been told is the top end of the client’s budget range. Maybe they do this because clients expectations for what they can get for the money they have to spend to not match up with the reality of what that dollar amount will buy? Maybe they do it because they think they can get the actual purchase price down to be within client budgets? Maybe they do it to push up their commissions a bit? Who knows…
Bottom line is that you need to be absolutely know what you can ACTUALLY afford on a monthly basis and stick to that number. Even if you don’t have major issues with your new home, chances are that within the first year something will need to be repaired or replaced. If you are beyond maxed out with just your mortgage, that could be disastrous.
Buying a home is an investment. Treat the process accordingly. In addition to picturing yourself and your family living in the space as you’re touring a potential home to buy, look carefully for signs of potential problems.
- Look closely at doors and windows and the walls and trim around them.
- Look closely in the bathrooms for any signs of water damage or mold.
- Look up – see if you see any evidence of water staining on ceilings anywhere.
- Check the exterior – look for trees too close to the house, roof problems, drainage issues, etc.
- Go into the basement and see if it smells musty or moldy and look for signs of water problems.
Make sure you understand how the home buying process works in your state. Make sure your realtor goes over the process and how and at what points you have the right to cancel the purchase. If there are deadlines for making those types of decisions, mark them on your calendar so you don’t accidentally miss one. Depending on how much flexibility you have as buyer, your willingness to make an offer should be impacted.
For instance in PA, there are all kinds of contingencies in the Agreement of Sale document. Mostly they have to do with inspections. Essentially you have the right to terminate the deal after you get any of your inspection reports if you don’t like what they say.
Understand the process and do your best not to get so caught up in the emotion and excitement of it all that you ignore or don’t bother to even look for the basics. Some homeowners will go to pretty great lengths to hide problems. Sometimes there is no way for you to know this has happened. Just pay attention as much as you can. In our case, once we realized there were problems and we started looking even a little more closely at the house, we suddenly saw things that if we had been looking more closely we would have noticed sooner. We counted on our inspector to find these as well, which he didn’t.
Keep your eyes open and don’t be afraid to take notes, pictures or videos to refer to later!