Like I’ve shared on social media and on the blog a bit, I recently purchased my first home! (Insert ALL the emojies here).
I’m still grasping the fact that I’m adult enough to own my own home and that I’m also the landlord of the property. The whole process of buying a home was fun, but also incredibly stressful and long – there’s so much more that goes into it than I initially knew.
Since I just went through everything and had a ton of questions to ask before buying a home – and am still going through it – I wanted to write a few articles on major points of the process. I’ll get into actual steps and then homeowner responsibilities in later posts, but today I want to focus on what to ask before actually signing the papers.
Questions to Ask Before Buying Your First Home
There’s so much to consider beforehand – it’s much more intense than just signing a lease – and it’s also legally scary to not ask certain questions. It’s also a bit tricky to figure out when exactly is the best time to take the leap – there are other factors on top of money. It’s about where you are personally, where you see your future going, and so fourth. Basically, it’s a long list of considerations. So let’s get into them!
Are you ready for the commitment?
I can’t remember where I heard this, but someone once told me that buying a home is more of a commitment than legally marrying someone. Of course the two are different, and I wasn’t buying a home with a partner, but that’s always stuck out to me – the seriousness that comes with attaching yourself to a home and mortgage. Here are a few things to consider when making sure you’re even ready for the commitment:
1. Do you feel settled in your city?
You don’t want to buy your home unless you know you will be living there for 3-5 (5 is a lot safer) years. The major reason being that you spend a lot of money initially when purchasing. The investment that comes with buying a home (including what you make off of it – hopefully) doesn’t happen if you buy and then quickly sell it – unless of course you’re “flipping,” but I’m talking about traditional home-buying here. Basically, your chances of making money as a return on your house can’t happen in under a handful of years since you spend so much at first.
If you’re living somewhere where you want to be for a while – you have family close, you enjoy the area, you’re general happy there – that’s a good feeling to have before purchasing.
2. Do you feel secure in your job & job market?
But really. To stay in a home and city for around 5 years, you have to be committed to your job or the job market in that area. If you’re feeling like you want a change or will need a change once other things happen – like when you want to start a family in a couple years and move to part-time, for example – you might be better off renting until you’re sure.
Also, how’s your company doing in general? If you feel confident in where your job and company are going, and want to stay in that city’s job market, that’s a great step to home ownership.
Are you ready for the responsibilities?
There are major financial and personal responsibilities that come with buying. It’s not as easy as sending in a check every month to a landlord or calling that landlord when your water heater stops working in the middle of winter (eeek!). Much like having a kiddo (lolzzz well sort of), you have to think about all the tasks that come with having a house – and what you’re legally invested in. Here are a few things to consider when making sure you’re even ready for the responsibility:
3. Do you actually have time?
This was personally a huge contributor for me. I’m settled in Dallas and feel good with my career, but time is something that I don’t have a ton of – and I know most people feel this way. Like I mentioned, buying a house means that you also pick up a new job – being a landlord yayy. And even if you don’t have roommates, you are in charge of everything that comes with a home: scheduling handyman repairs (slash finding a handy man you trust), keeping up with all bills, researching how to fix things and what appliances are best, cleaning a likely bigger home, maintaining a yard, etc. It’s time-consuming, 100%.
Even though I don’t have a ton of time, my schedule is pretty flexible, so this is why I settled on the decision to buy. You need to be ready to devote time each week to taking care of your house – because something always comes up – or have the flexibility to deal with it. Owning a home is a full-time relationship, y’all.
4. Do you have cash money $$ for (surprise!!) repairs?!
We’ll get more into finances in the next section, but before even thinking about a mortgage or taxes, can you actually afford monthly repairs? Everything I listed above – from water heaters to taking care of a lawn – requires dollar billzzz.
So even if you have time and the flexibility, do you have enough in your budget to take care of a home?
A good way to do this is to add up all the monthly repairs that you call your current landlord for – they are likely happy to tell you how much it’s costing. Keep track of that amount for a least a year where you’re living to have a realistic approach to your repairs budget. And don’t forget about bills that might already be included in your rent (garbage, sewage, water, etc.).
Is it a good time to buy?
OK, so you feel ready for the commitment slash relationship and you’re ready for more time-consuming and expensive responsibilities, great! Next up, is it a good time to buy in the location you’re settled in? Here are a few things to consider when making sure it’s a smart time to purchase:
5. What kind of market is it?
Is it’s a buyer’s or seller’s market? This was a struggle for me because it’s not technically a buyer’s market in Dallas right now. BTW, a buyer’s market means it’s a good time for buyers (houses are more affordable, there are a ton of houses out there for sale, home values aren’t at their peak, etc.) vs. a seller’s market (home values are at their peak, there’s not a ton of housing inventory, prices are high). But even though prices in Dallas have increased significantly in the past year, they are also supposed to increase even more in the next year – which is a sign of a good investment.
This is something to definitely talk to a lender about – not just a real estate person, because remember they make commission off of you buying, and if that house is more expensive, they make more $$. Just because it’s not a buyer’s market doesn’t mean you cannot buy, but things like how long you’re willing to stay in that home and your long-term goals weigh more heavily on the decision. But generally, you want to buy when prices are not at their peak and when your city is still on the up and up when it comes to home values.
Also a little tip I learned: it’s generally best to buy a home in the opposite season from main/best activities in your area. Just like it’s cheaper to go on vacation in cities when it’s their “off-season,” the same goes for buying a home. And if you have a family and need to get kids into school, buying during the summer isn’t the best idea – even though the kids would have to start a new school during the school year. Houses, especially in good school districts, tend to be more expensive during convenient times to move, like summer.
6. How are interest rates right now?
Interest rates are a big contributing factor to buying a house. Basically, when you buy a house (unless you have enough cash in your bank to pay off a home right away – definitely not the case for me, lol), you’re borrowing money from a bank. And just like any loan – student loans, leasing a car, a credit card – there are interest loans involved. An interest loan is basically a percentage you’re paying the bank in return for them lending you money. They aren’t just loaning you hundreds of thousands of dollars out of the goodness of their heart – they make money from it.
You want to buy when interest rates are low. A lower interest rate will end up saving you a ton of money in the long run. Even if something has an interest loan of 5%, for example, which doesn’t seem like a ton each money, add that up and times it by a year. That’s a lot of extra money each year! Lenders and bankers can both tell you what the current interest rates are and here’s a handy little tool to calculate how much it’ll cost you.
7. What about your credit and debt?
Good credit can not only help you with you interest rates, but it also helps even getting that loan. Lenders want to see that you don’t have a lot of debt and that you have a good credit score – key to getting a fair loan or a loan at all. You’ll want to pay off as much debt as possible and keep on top of any OTHER loans you have prior to owning a home. Some resources say that paying off debt is even more crucial than saving more before buying a home. Also, just knowing that you’re on top of bills before buying a home is key for peace of mind.
Can you afford it?
The final and likely most important question! Legally, you do not want to buy a home if you can’t afford it – obvious enough right? But a lot of people suffer from trigger-finger and end up buying a home when they simply can’t afford it. Here are a few things to consider when making sure you can afford everything that comes with a home:
8. Do you have enough in savings?
Remember all the things I listed when I talked about responsibilities that come with owning a home? Having a healthy savings account SOLELY for home emergencies is totally necessary – not to mention any remodels you want to take on. You’ll have an inspection before buying a house so you’ll get a feel for some of the major things that you might need to invest in and why – like a new roof which is tens of thousands of dollars – but stuff happens (haven’t you ever seen Fixer Upper!?). People lose jobs, family emergencies happen with the house, and God forbid they do, but it’s smart to be realistic about your savings. If you weren’t able to work for a few months, do you have enough saved to care for your house – among other things?
9. Are you’re taking into account all the bills?
When I first started looking, I mainly focused on the mortgage, which wasn’t much more than what I was paying in rent. But then I got a big ol’ slap in the face when I found out everything else that I’d have to pay for: property taxes (yearly), insurance, any HOA fees, city assessments, and closing costs (upfront when you purchase, but it’s a hefty chunk of change), and then the general upkeep of the home. This skyrocketed what I need to have each month to pay for the most – it most definitely is not only a mortgage. Add up all those costs first.
10. Can you afford what you “want”?
This tool is helpful in finding a realistic number that you can afford. I honestly thought I could afford a lot more before using this tool and accounting for all the bills. Can you find a home that you love? How much will the necessary renovations be if you don’t love certain rooms?
Talk to Me, People!
Phew, OK! Those are the questions that are totally necessary before buying. I know I sound like a total downer, but this is important – and one of the biggest decisions in life! Definitely something to plan for for a while and to make sure your ducks are in a row first.
I hope this was helpful slash interesting, y’all?!
Let me know what you think so I know if I should continue with the other articles I have planned for home-buying. What else do you have questions on? Leave me a comment please!
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