Questions to Ask When Buying a House for the First Time
Taking the leap into homeownership is a big decision — and one that requires careful consideration of the pros and cons. But if you’re buying a house for the first time, it’s hard to know where the potential pitfalls
might be. Don’t worry, I have you covered! Answer the following questions and you will be well on your way to purchasing your first home.
1. How Much Can I Afford?
This is a critical question to answer and requires finding a good lender and going through the pre-qualification process. Your lender will give you a list of required documentation, but be prepared to gather all income, expense, tax, and debt information. The hard part here is gathering the documents; once your lender has the documents in hand, you should receive your pre-qualification letter within a day or two. The pre-qualification letter is a required part of your offer when purchasing a home and therefore is not optional.
2. Do I Have Enough Money for a Down Payment?
Saving for a down payment can be intimidating and a real challenge for many, especially for first-time homebuyers. The good news is there are many down payment programs available that include important benefits like increasing home buying power & getting into a home sooner than planned.
Many people assume the down payment must be at least 20% of the purchase price. However, 20% is not necessarily required; home loans are possible with as little as 3.5% down.
3. What Are Closing Costs?
Closing costs are fees paid at the close of your real estate transaction and are impacted by many variables. Examples of fees are loan origination (points) and HOA fees; some people also consider their inspection costs a closing expense. For a purchase in Los Angeles County, I recommend budgeting 1% of the purchase price for closing costs. Once you make an offer, your real estate professional can prepare a detailed estimate based on that specific home. Also, be aware that certain down payment assistance programs include some down payment help.
4. What Are the Hidden Costs of Owning a Home?
When you rent a home, your property owner covers maintenance and repairs. But as a homeowner, you will be responsible for repairs and ongoing maintenance, such as taking care of your yard, repairing your air conditioner, fixing that broken sprinkler, or replacing the roof. Depending on the home you buy, you may need to buy appliances and household tools to make simple repairs and perform upkeep. It is also wise to create a rainy-day fund and include a monthly deposit as part of your household budget.
6. How Much Will It Cost to Move into My New Home?
Whether you’re moving across town or across the country, always calculate the moving expenses: renting a truck, hiring movers (even if it’s just beer and pizza for your buddies), buying boxes, and more. These costs are often more than one anticipates. It’s also important to consider any new furniture you may need to buy for your new home.