Home means a lot to us: it’s where we spend time with families, celebrate traditions, and build community with our neighbors. While choosing any home is an emotional decision, it’s also a significant financial decision, as housing takes up a significant portion of most family’s budgets. Plus, most Americans build their net worth through homeownership. Buying a home is one of the most significant financial decisions a person can make and requires careful consideration and planning.
Before taking this major step, you should ask yourself a series of personal, financial, and property-related questions, and gather other helpful information to evaluate potential properties. Understanding your motivations will clarify your readiness and ensure that the home aligns with your long-term goals. If you’re buying a home with a partner, going through these questions together can help you see if your views match up.
Let’s get started.
Personal Questions to Ask Before Buying a Home
Many people take time to think about the financial considerations of buying a home, but this decision encompasses more than just money. For that reason, we’ll start by exploring some of your personal motivations for buying a home. Close the website tab with homes for sale and dig into these first:
1) Why do you want to buy a home?
Consider your motivations for making this big purchase. Whether you’re a current homeowner or a future first-time homeowner, it’s always important to step back and reaffirm that homeownership works best for you at this stage of your life and the near future.
2) How long do you plan to stay in this home?
Consider how long you would be in a specific property and geographic area – are you tied to a community, or planning a change in the future? Think about how that impacts your perspective on homeownership.
3) What do you hope to do or have in your next home that is different from your current home?
Think broadly about what any new home can offer you that your current space cannot in terms of your lifestyle. Think about things like considerations, location, and how you want to use your home. This can help you be more objective when you review the attributes and benefits or drawbacks of specific homes that come up on your house hunt.
4) Am I prepared for the time and energy it takes to maintain a home?
Maintaining a home is hard work. CNBC reported that homeowners spend an additional 161 minutes per week more than renters on home upkeep, with most of this additional time spent on lawn care and maintenance. Think about your lifestyle and schedule and how the time spent on home maintenance already fits in or would fit in.
Financial Questions to Ask Before Buying a Home
Besides being an important personal decision, buying a home is the most impactful financial decision most Americans will make. As we mentioned in the introduction, most Americans build most of their financial net worth through their primary residence. Taking some time to really consider all the financial elements of this decision beforehand can increase the chances that you make a home choice that sets you up for financial success. Here are some financial considerations:
5) How stable is my income?
Income stability is an important part of homeownership for a few reasons. Most people need a mortgage to purchase a home, and having stable income is important to getting approved for a mortgage loan and being able to pay it back. Even if you do not need a mortgage, or even after the mortgage is repaid, homeowners still have property tax and maintenance costs.
6) Do I have a sufficient emergency fund aside from my home savings?
Consider if you have a few months’ worth of income set aside for emergencies or a loss of income separate from any savings you would use to buy the house. If not, set that aside and re-evaluate how much down payment savings you have.
Check out our blog on building an emergency fund beyond six months for more information on bolstering this out.
7) How much of a down payment can I afford?
Evaluate your current savings, plus your current income and expenses to consider how much more down payment savings you could accumulate.
8) How much of a total monthly housing cost can I afford?
Experts recommend that housing costs should take up no more than 30% of your gross monthly income. For homeowners, this includes your mortgage, interest, any private mortgage insurance, property taxes, homeowner’s association fees, utilities, and home maintenance. Calculate what 30% of your monthly gross income is, and work backwards from there, working in the associated costs beyond just the principal and interest.
9) How is my credit score and history?
If you’ll be applying for a mortgage, evaluate your current credit standing, as it impacts the types and rates of loans you may be able to use for the home purchase.
10) What kind of mortgage would I likely qualify for?
Consider your credit score and the types of mortgages available. You may go with a conventional mortgage, but at different term lengths. You may also look into FHA loans.
11) What is my overall home purchase price budget based on my current financial factors?
After you’ve considered your current state of finances, you can better calculate what sort of home purchase price would be reasonably affordable for you.
12) Would I find more value in spending more for a new construction or newly renovated home?
You may pay a premium for a new construction or an updated home over a fixer-upper, but consider if that is money well spent to you.
13) Do the homes for sale in my budget match my needs?
Once you’ve determined a ballpark purchase price, determine if the properties available in the area(s) you’re considering align with your realistic needs for a home, like the number of bedrooms and any other dealbreaker features.
If you’re looking for a place to save for your next home or projects around the house, check Milli’s Jars! They can give you a dedicated place to save and tied in with our helpful spending features, help you stay on track to meeting your savings goals.
Location Questions To Ask Before Buying a Home
You can change a lot of things about your home, but you’re locked in to the location. It’s especially important to carve out time to consider the location within a region but also within a specific town or neighborhood.
14) Is the property near essential locations and services?
Consider the distance to any household members’ workplace or schools, and basic needs like grocery stores, emergency services, and medical care.
15) Is the property near other amenities you value?
Consider the distance to other less essential, but other things you may value such as recreation, community centers, entertainment, dining, specialty stores, and houses of worship.
16) Is the property near family and friends?
Evaluate how far you would be from family members and friends. If you’re moving or live far from these loved ones, consider the property’s distance to places like airports and train stations that can help make it easier for visits.
17) How is the quality of local education options?
Consider the school districts, local higher education options, availability of private schools, and enrichment opportunities like museums in the vicinity of the property.
18) What kind of transportation options are realistic from this property?
Is the home car dependent, or is it feasible to walk, bike, or take transit to get around, and does that work for you? Consider the impact to your lifestyle and transportation costs.
19) Does this location have a strong record of public safety?
Use the FBI’s Crime Data Explorer to get data on crime, read local news reports, check out the law enforcement’s social media, and speak to people in the community and get their first-hand perspective.
20) What sort of weather or environmental considerations impact this location?
Research the typical weather for an area and understand how that relates to your property, such as flooding concerns, snow or heat waves impacting your energy bills, or wildfire risk.
21) What are the property tax rates for a specific location?
This one blends finance, property, and location. Make sure you understand the property taxes at the state, county, and town level, and how often the property gets reassessed for value.
Property Questions To Ask Before Buying a Home
After working through the general state of homeownership, it’s time to dig in to the considerations for specific properties you may want to buy
22) What kind of condition is the home in?
Each property has its own state of condition, and this can vary even for two homes that look similar on paper. Really consider the state of the property as objectively as you can. Research common concerns for homes of that region or age so you’re informed about what elements to scrutinize.
23) What is the cost of repairs or updates needed to make the home acceptable to move in?
Consider the baseline costs to bring the property to a level where it is safe, clean, and makes sense to move in and start living there. Factor in you need to maintain a separate living space for some time while you get the home up to an acceptable level. These will likely carve into your home savings budget, and can make or break a property’s affordability for you.
24) What is the cost of repairs or updates needed to make the home up to my preferences?
We’ll take it a step further – now consider the additional costs of tailoring the home to your liking. You may not need to address these right away, but it’s still helpful to consider that you may have more home expenses on the horizon.
25) Will this property meet my current and future needs?
You don’t have to buy a forever home, but it’s helpful to think about how long a specific property could realistically support your lifestyle. Consider your lifestyle now and any possible changes in the near future (and perhaps more distant future) such as the number of people and pets that may reside there, the ages of residents, and if it’s set or for remote work or retirement.
26) Is this home accessible, or set up for aging in place?
Accessibility and aging in place may not be top of mind of you right now, but they are still important to evaluate how a property stacks up. While you may not need an accessible property now, that could change in the future. You may not have older household members, or intend to own this home in your elder years. However, a home’s accessibility (or feasibility to become more accessible) can limit or expand the pool of potential buyers competing to buy a property or if you ever sell the property.
Market Questions to Ask Before Buying a Home
The real estate market is unlike buying any other thing because you can’t just walk into a store, pick one off the shelf, and check out. In addition, the real estate market in the United States has been tumultuous the last few years due to multiple macroeconomic factors. Here is what you should consider before you jump in:
27) What are local real estate trends I should know?
This one you can ask a real estate agent – ask them what’s going on in the local real estate market with other buyers and sellers. They can advise of trends like home sellers listing prices competitively to drive a bidding war or if competing bidders are waiving home inspections. These can help you make your moves accordingly.
28) What’s the realistic availability of housing stock that meets my needs and budget?
In recent years, the inventory of homes for sale has been down nationwide. Some areas are tighter than others. While the inventory can change over time, be realistic about the number of homes you could choose from during an active house hunt.
29) How fast do homes sell?
Some markets are lightning fast with homes selling the first weekend they’re available for tours while others are much slower and you can deliberate on a property. Understand the typical timelines that home sellers and buyers are following.
30) Am I prepared to keep pace with the market?
Much of your home shopping and buying experience can be driven by market forces, and they are even more impactful when you’re working with a less competitive budget. After all your research and reflection, consider if you’re prepared to do what it takes to enter the market.
Conclusion
Taking time to really dig into your motivations behind core life decisions can help you feel more confident and also get prepared! By evaluating your financial stability, understanding your budget, and assessing the true cost of homeownership, you can avoid potential pitfalls. Additionally, considering personal factors like lifestyle needs and future plans ensures that your new home will meet your family’s requirements and provide lasting satisfaction. Thoroughly investigating the property itself, from its condition to its location, helps avoid costly surprises and ensures a wise purchase. Taking time to reflect can help make the home-buying process more rewarding and fulfilling – though it may not feel that way until all the boxes are moved in and unpacked.
Keep reading on the Milli blog:
30 Free Things to do Instead of Spending Money When You’re Bored
Reflecting on How Your Family Impacts Your Relationship with Money
How to do a Mid-Year Money Review
