10 Things You Should Know Before Buying A Home

Stepping into the world of homeownership is a monumental decision with numerous factors to consider. From understanding the intricacies of mortgage preapproval to navigating the financial nuances of down payments and credit scores, it's essential to arm yourself with knowledge before diving in.

In this guide, we'll explore the top ten things every prospective homebuyer should know to make informed decisions and turn their dream of owning a home into reality

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Make sure your credit score is high enough to

When searching for a new home, it's important to check your credit score. You'll need to have high credit in order to secure financing with many lenders and there are incentives available if you're just starting out on the journey of building up that number!

But don't get your hopes up just yet - you might be denied one more time than someone with perfect credit! This is not your fault if you’ve had some financial hiccups or no longer qualify for these types of loans because of the income level. 

Fortunately, the owner will probably still want to see an application from you even if they won’t provide financing themselves so at least there's a chance that things may work out before wasting any more energy on this particular property. If you are buying a home, the credit score needed is typically 600+.

It's important to know what type of loan you want. There are FHA loans, VA loans, and conventional loans. To understand more about these options, read our detailed guide on 6 Types of Mortgages: Which Is the Best?. FHA loans require people with low scores but require an up-front fee and PMI (Private Mortgage Insurance). 

VA Loans can be eligible with a minimum score of 620+, cash down payment requirements vary by county.  Conventional home loan rates and guidelines differ by lender and creditworthiness so it's appropriate to contact lenders beforehand if possible for more info on this document requirement.

You can get a mortgage even if you have a credit score under 700, but you will need to find the money for your down-payment instead of taking out an insured mortgage. Lenders typically don't want to lend more than 65% of the loan's value, which is about $130,000 for a $650,000 home.

In short - you can buy with little or no down payment and good credit - just not at the same time. You'll also pay higher interest rates. Check out our article Why your Equifax credit score is lower than TransUnion to help you understand your credit score. For more unconventional financing questions, like if you can use a credit card for your mortgage, check out  Can You Pay Your Mortgage with a Credit Card?.

Get pre-approved for financing

You should definitely get pre-approved from a lender before starting your journey for a home. Lenders will need to pull your credit and income information.

You'll be able to see what you qualify for upfront so that you can focus on homes within the range of your budget and possibly get a better interest rate since they know exactly how much money is available to use as a down-payment. Learn more about this in our article  Pay Off Debt Before Buying House.

This will allow you to have a starting offer price in mind before you go shopping, and it will help weed out homes for sale that you're not interested in before you get too far into your search.

It takes less than five minutes and keeps you from going back and forth with the seller about money-wasting items like wall colors or toilets. 

You should be able to find mortgage pre-approval forms online. You can also apply directly with the lender rather than submitting paperwork through another mortgage broker.

While there may be a few rare cases of people who can buy without getting pre-approved first, these are exceptions rather than rules.

Find out if there are any planned developments in the area

This is a great idea generally, and you can also look for signs in your town of future developments to see if there are any planned developments that would negatively impact your home's value.

If you're just shopping for a place to stay, then not knowing should be fine. If you're looking for a place in an area that historically hasn't had much growth, it would make sense to find out if there are any planned developments since property values depend on their location near desirable land.

There will always be people who'll covet the remote places as well as those who prefer easy access to the metro areas—but without knowing about upcoming development plans, they may not be able to have their pick of locations.

Research local zoning laws and regulations

It benefits you to know the local zoning laws and regulations in the neighborhoods you are looking for a new home. This will affect how you can use your property and what types of construction projects may be coming in the future.

Some communities won't allow for certain things like standalone garages or raising buildings higher than a certain height limit, so make sure to find out about these before making an offer on any property you're considering buying.

In areas where there are restrictions against expanding outward because of water scarcity issues, look at opportunities to build upward instead with smaller homes.

If you live in an area that's experiencing drought conditions which means less availability of natural resources such as fresh water, then building upwards might not sound all that appealing—but it could save resources by cutting down on surface runoff into rivers when rain does fall.

You can't always get what you want

I know everybody wishes they could find their dream home, but it's more than likely that the perfect dream home doesn't exist, or at least it doesn't exist on your budget.

It might be a good idea to set your expectations before you go house hunting, so when something as close to what you had hoped turns up in spite of your hesitation about its flaws—you'll know if this is the one for you or not.

Some features homeowners may think they need in their new homes aren't necessities at all and you'll most likely have to get used to not having all your boxes checked on any one of the properties you view.

If you're looking to buy a new home, it's important that your budget and expectations are realistic. If the total price of a house seems too much for an offer and then there are closing costs on top of that, so be sure to do some research before going into this with blinders on.

The housing market will always change with demand but in times like these don't get caught up in something because it sounds good when you hear about other people buying one—reality may have changed by the time you obtain financing or find out how long markets take around where you live.

There can also be land considerations such as geography and location which should not be underestimated if they come down to whether or not someone wants enough space and privacy.

Location, location, location

I'm sure you have heard this phrase before when it comes to buying property or starting a business. You should look for a location that suits your needs and lifestyle. If it doesn't suit you, there is no point in buying it. 

Location goes hand-in-hand with convenience and what matters to you will be different from what matters to someone else. 

It has also been proven that nearly all people really do live near each other with about 90% of Americans living 50 miles or less from a Walmart store and 70% within 20 miles of one.

This means that there are only certain things like access to subway systems or highways that may impact location for some people but this isn't something we generally think about when looking for a house because of traffic and public transportation.

An appraiser looks at the comparable homes in the area where you are buying, what other comparable properties have sold for recently, foreclosures that have been listed or taken off the market, as well as any property improvements, are done on your prospective house.

By looking at these things they can determine value based on recent sales of similar houses in this neighborhood.

Consider what kind of home you want and how much space you need

The three most important things to consider when buying a home are the neighborhood, the house itself and its condition, and how much it will cost to maintain the house.

You should plan to spend about 20% of the purchase price on repairs and maintenance in your first year of homeownership.

One way to save money during negotiations is by getting a survey done before you negotiate or close, as this will help determine if any major structural problems exist with the property that might lead to expensive future repair work.

A professional appraisal can also be helpful when negotiating prices both up and down because it gives an objective evaluation based on recent sales data for similar homes in your area.

A good negotiator may suggest amending the contract so that all offers are contingent upon the completion of certain inspections, such as foundation stability. This ensures that no one walks away from a potentially bad deal due to hidden defects.

Home Inspection

Once you have an accepted offer on a home, schedule a professional home inspection. On average an inspection costs $300-$500. The inspection will cover all major systems and components including the roof, foundation, electrical, plumbing, HVAC, appliances, etc.

If issues are discovered, you can request repairs from the seller, negotiate the price, or walk away if problems are too costly. Ensure the inspection occurs before closing so you fully understand the condition before finalizing the purchase.

Your Space Requirements

Space requirements are very subjective and depend on the person's living preferences. Some people need more room to have their own space while others want to live in close connection with one another in a small space. That said, most people could get by comfortably in about 500 square feet if they are willing to give up some of their furnishings.

Larger spaces come with an average salary increase for the size, as well. A 2000 square foot home goes from $550,000 to $750,000+, while a 3800 square foot home can go up as high as a million or more dollars! This is also assuming that the house has just 2 stories--nevermind trying to

Bring your checklist

When viewing homes for sale, make sure to bring your own checklist of must-haves so you don't forget anything.

Below is a sample checklist to bring with you when shopping for a new home:

• A good location, close to work and family.
• Enough bedrooms for the size of your future family. Remember that kids grow quickly!
• Big enough backyard so the children can run around safely outside without worry of cars or passing traffic in an area with a lot of foot or vehicle traffic.
• Walkability score (a number from 0 - 100),
• Quality schools nearby (#0 being low scores),
• Neighborhood amenities like pools, parks, theaters, grocery stores, etc

It's not all about the money

Something to keep in mind when home shopping is, it's not all about the money.

Home prices are on the rise, but so is your income. A good rule of thumb is the total monthly debt payment shouldn't be more than 36% of what you earn each month.

If you're going through a divorce or have been renting for years then this may be an opportunity to start fresh in a new neighborhood with new people.

Don't forget to check the crime statistics for any neighborhood you're considering.

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