How to know what to look for when buying a home.

What you need to know before buying a home or property...

Instructions

Difficulty: Moderately Challenging

Things You’ll Need:

• Do your homework
• Make sure it's affordable!
• Hidden agenda
• Location, location, location
• Building new
• Keeping the future in mind

1. Thoroughly research location, school district, deed restrictions, and taxes using the Internet, real estate representatives, and housing guides. The more information you have, the more you will understand the issues surrounding the home-buying process.
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   * "You need to educate yourself about what to look for in a home," says Cheryl, of Maryland. "You need to have an idea about what you want in a house and get to know what your options are to improve the house you choose. [Being informed] can make having a house a much better experience."
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2. Before you find that oh-so-perfect Cape Cod, begin by determining your buying power. There are Web sites, including Home and Family Finance Resource Center’s calculator "What Will My Monthly Mortgage Payment Be?" that can help calculate how much you can afford and what your approximate monthly payments will be. Remember that mortgage interest rates can vary between lending institutions, so be sure to contact your credit union for its mortgage rate information. Experienced loan counselors will review with you the wide range of home financing options available and help you determine which one is right for you.
   In addition to learning what size house you can buy, determine the amount of your down payment. The larger the down payment, the more equity you will have in your house and the smaller your monthly payments will be. Some lenders will lend you up to 95% or even 97% of the price of your home. But, if you borrow more than 80%, you'll have to buy private mortgage insurance (PMI), which is added to the cost of your monthly mortgage payment.
   
   Remember the PMI expenses.
3. Finding the right house isn’t just a matter of falling in love with a floor plan. Finding the right neighborhood—which might have a vibrant location and correspondingly vibrant residents—is just as important, if not more.
   By the same token, information about neighborhood crime is free for the asking from most local law enforcement agencies. County residents can find out whether a registered sex offender lives nearby with just a few clicks of the mouse or a simple phone call.
4. People looking to remodel their existing home or build a house from scratch can save themselves countless dollars and many headaches by checking the contractor's and builder’s backgrounds before hiring them. Many government and private organizations, such as the Better Business Bureau, provide this information.
   
   When checking out the builder's reputation consider such things as how long the company has been in business and how many homes it has built; its reputation with buyers, other homebuilders, and the realty community; warranties offered; and if there’s a department dedicated to warranty issues. The best way to check out a builder is to ring doorbells in the development.
   
   "I wish we’d rolled landscaping expenses into our mortgage; we could have had the work done sooner."
   Mary, in Georgia, regrets her family’s choice of builder. "There is minimal insulation in the house and the air conditioning unit for upstairs is not sized to handle the extra cooling an upstairs needs. When we use a major electrical tool all the lights in the house dim...The master bathroom spa tub dropped down a couple of inches because the plumber did not install proper supports."
   
   And remember all the expenses of buying a house, even a new one.
5. Many homebuyers overlook how a house will function for their family: Those who like casual entertaining should look for a large kitchen that's open to the family room. Those who enjoy privacy should go for a master bedroom and bath that are separate from the rest of the living areas. Also keep in mind the size of your home and the size of your family. Although you may have plenty of room now, the future may include caring for elderly parents or additional family members.
   
   
   For example,a guy from Maine says, "Live for today and plan for tomorrow" was his motto the year he bought his home. "I was like any other buyer, trying to get as much home as I could without breaking the bank," Tom says. So he purchased a house that needed a lot of work or "sweat equity," as realtors call it. Seven years later, Tom still is completing his home’s rehabilitation. "I am not disappointed about the progress but I am bothered about the size of the home. I have outgrown it and yearn for more space. Better planning would have included finding a home with more room to grow."
   
   No one ever said purchasing a home was easy, but there are ways to help ensure that unforeseen problems don't crop up. Doing your homework and taking the steps outlined above will minimize the odds of this happening.

Tips & Warnings

• In today’s market, working effectively with a real estate agent will help make finding a home a rewarding experience. Home buyers should be well prepared, knowledgeable, and willing to take some simple steps to maximize the productivity of their agent. Remember, while an agent can be a big help, he or she works for the seller, not the buyer. Get preapproved One of the most important things you can do is to establish how much house you can afford prior to beginning the home-searching process. Many real estate agents require a preapproval letter from your loan officer indicating the amount that you have been "approved" to spend in purchasing a new home. Establish priorities Before you even begin looking for a house, make a list of elements that you’re looking for. If a two-car garage and a four-season porch are "must-haves," indicate it on the list. Communicate the essential features of a house that you like or dislike to your realtor. That will help him or her "narrow the field" when viewing potential homes. Keep an open mind In the ideal world, you would fall in love with the first house you look at. But it is more likely that you will need to look past the stained carpet and ugly wallpaper and envision the "beauty" underneath. So don’t be too quick to pass up what looks like a "handyman special" before obtaining additional information about the property. You never know if what looks like an ugly duckling may be the home of your dreams.