Buying a house is arguably the most important investment you will ever make. Exciting and fulfilling as it may be, it actually requires a lot of time and effort on your part. But the sooner you start to plan the easier it will be. At the very least you should have some information on how and where to start. Which is why we have put together this list of everything you need to keep in mind to get the ball rolling.
What type of buyer are you?
There are several types of home buyers, but the main and well-known ones are:
- First time home buyer: you fall into this category if you have never bought a home before. If you fall into this category you’re most likely looking for something that suits you or your family’s basic needs, and is affordable.
- Second home buyer: this is a buyer who already has a primary residence but wants to purchase another home. That move may be motivated by many factors, including the need for more housing facilities, work location, or family requirements.
- Vacation home buyer: this type of buyer is looking for another home when they want to get away or for vacationing purposes. Chances are he or she won’t be using it for the better part of the year. Some home buyers usually opt to rent out their vacation homes whenever they are not using them.
- Investment property buyer: an investment property is a house meant to bring a return on the investments put into the purchase and maintenance of the home. Returns can come from renting out the property, or selling it for a higher price than what you bought it for.
- Non-resident: if you are not a US resident but plan to purchase a home in the country, you fall under the non-resident home buyer category. Buying a home in the US is generally easier than in many other countries, but might require some extra considerations.
Depending on which category you fall into you may be eligible for some perks and benefits that can save you both time and money. For example, there are multiple down payment assistance programs designed for first-time home buyers. At the same time, lenders usually have special mortgage packages for investment properties with favorable interest rates.
Determine the type of home you want
You may not be ready to make the actual purchase yet, but knowing the type of home you want will go a long way in helping you plan things like location and cost. Let’s review the four main options to choose from:
- Single-family detached: this unit is meant for one family only. The word ‘detached’ means exactly that – it is not attached to another house, so you will not be sharing a wall with anyone else.
- Townhouse: contrary to a detached unit, when you buy a townhouse you will share a wall with a neighbor. That means your house will be attached to another (or even two or more others). Townhouses usually have common driveways.
- Condominium (condo): a condo is just like an apartment, except for the fact that you actually own the property’s title. Most residential areas with condos feature communal areas like a common lobby or entertainment spot. They are also managed and maintained by a homeowner’s association.
- Cooperative (co-op): in the case of a co-op, you don’t own the title to the property, but you become a member (shareholder) of the community that owns the property. Basically it is a group of houses where every resident is a shareholder. Ownership is in the form of shares, not the title.
Location, location, location
Location is arguably the most important factor to consider when contemplating buying a house.
For starters it will determine how comfortable you are in your own house. It is important to consider the neighborhood where you’re planning to move. Make sure you feel it is safe, affordable, and ideally close to schools, supermarkets, highways, or other things that are important to you.
Secondly, the price of houses varies from one place to another. In Saratoga, California homebuyers pay an average of $2,453,718 for a 4 bedroom, 2 bathroom home while in Scranton, Pennsylvania the average listing price is just $118,424. It may be a good idea to figure out first how much you can afford, and work backwards from there.
Thirdly, lenders have different mortgage loan requirements for different locations. For example, if you buy a home in a high-cost area, you are likely to pay more interest on your mortgage compared to a house located in an average-cost market.
Finally, different locations will have unique real estate requirements that are important to know and factor into your home buying decision. Some areas will require you to pay for homeowner’s insurance, home association fees, and others don’t involve this extra cost.
Profile your perfect house
You might have a dream house in mind. It may be a modest property with a front yard and white picket fence, or it may be a high rise loft in a metropolitan city. Whatever property type you’re envisioning, start by noting it down on a list.
Outline everything you want in a home, starting from size, number of rooms, lawn requirements, whether it is attached or detached, nearness to amenities and any other considerations that you may have. Remember to list your idea locations, cities, and counties as well.
When you know what you’re looking for, you’ll find the house hunting process much easier. Whether you’re searching for houses driving around or enlisting the help of real estate agents, having a list of your preference will make sure you start off your house hunt on a good foot.
Stay up to date with market trends
Start your research early. Read real estate websites, newspapers and look for relevant news whenever possible. Pay particular attention to the counties where you would love to own a home. This way you will be up to date with the latest market trends, including interest rates, house prices, mortgage requirements, security standards and any other important factors. If you have any questions throughout the process, MainStreet Lenders are more than happy to lend our expertise in any way we can.
Now you’ve laid a great foundation for taking the next step towards home ownership and move on to the actual search.