Buying a new home can be exciting and fun. It will generally be your biggest expenditure in your lifetime (other than taxes) and will the place you will spend the majority of your time.
So it pays to analyze a home purchase thoroughly.
Most real estate agents will give you all the benefits of buying and owning a home, but very few will give you the other side of the picture. Not me. If you are in the market for a new home, I want you to see not just the good, but also the things no one else will tell you about.
Let’s dig in.
Your Expenses Will be More Than Just Your Principle Mortgage Payment
Insurance, interest, property taxes, homeowner’s association dues (if any), and more can add up quickly. By some estimates you will need to add about 25%-30% in additional costs to your principle payment to account for these items. That means if your principle mortgage payment is $1,500 then in reality your total payment is going to be more like $1,875 to 1,950 per month.
This isn’t a bad thing necessarily, but it does need to be taken into account when figuring out your monthly outlay so you aren’t caught short.
Other expenses are going to include utilities, maintenance, furniture costs (which are almost always underestimated), and other upfront costs associated with closing on your home loan (such as title fees, a home inspection, an appraisal, and so on.)
Your Neighbors Matter
One piece of advice that is often overlooked is to go to the surrounding homes and chat with the neighbors. Try to get a feel for their personalities, if they are responsible homeowners, if they have kids or pets (again, not a bad thing in either case, but you want to make sure you gel with them based on your lifestyle), what they think of the neighborhood, and anything else you can think of without coming across creepy AF.
These are going to be people you interact with - directly or indirectly - for years to come, so you want to make sure you are going to be a good fit for the neighborhood.
What is the Area Like?
Sometimes my clients fall in love with a home only to later realize they don’t love the area they are in. This could be because the school district isn’t up to par, the nearest Costco is 20 miles away, there aren’t any nightlife spots nearby, access to hiking is inconvenient, or whatever the case may be.
Buying a home is much more than just choosing a place to live. It’s about finding something that supports your desired lifestyle.
Try to Find Out the Long-Term Plans for the Neighborhood
In the same vein as the above point, you will also want to see if you can find out what development plans there are for your neighborhood, particularly if you are buying into a relatively new development.
Building out the development more and more can create more traffic, more congestion, and more construction. This may or may not be a deal breaker for you, but a heads up on what is coming could help you with your decision.
It Can be a Lot More Work Than You Thought
Keeping up with repairs, maintenance, yard work, etc. may be things you didn’t think of or want to mess with as a homeowner. Generally, when you are renting, those things are taken care of by the landlord or property management company and there is a certain level of convenience in that. Just be aware that you are going to have to provide quite a bit more TLC than you are probably used to.
Buying your first (or next home) is as American as apple pie. Millions of people begin their path to wealth each year through home ownership. I believe it is one of the fastest ways still to build a net worth today. But, there are lots of things to consider when doing so. I hope that this article helped you identify a few that may not have occurred to you and will help you better plan your homeownership journey.
As always, if you need a helping hand, please feel free to contact an agent at Real Estate With Tazz and let us help you navigate these sometimes murky waters.