We have made a few moves since we got married. My husband and I started our life together in a small apartment with continuously broken air conditioning. When I got pregnant with our first child, we moved into a cute starter home, which was somewhat far from work. After child 2 came along, we decided to move into a bigger house that was also closer to work. After child number 3 showed up, we decided to move one last time into a house that had a bigger basement and a home office. We have been in that house for 8 years now, and will probably live here until retirement.
Even though we have no intention of moving anytime soon, I know there are many people out there that want to take advantage of the depressed housing market. Therefore, I thought I would share some tips to follow when considering buying a new home, based on my own experience:
- Don’t buy a giant house just because it is a perceived deal. Buy only what you think you truly need. No reason to pay for a bunch of rooms you won’t use.
- On the other hand, do consider resale value. For instance, a 3 bedroom home will sell faster and at a higher price than a 2 bedroom home. Most people want at least 3 bedrooms, and more than 1 bathroom.
- Consider the school district your prospective home will be in, even if you do not have children. People will pay a premium to live within the boundaries of a good school district, which again, affects resale. Also note that just because a home is in a particular city, it doesn’t guarantee that the home resides within that city’s school district. For example, the city I live in has one of the best school districts in the state. However, the city itself feeds 6 different school districts, all with varying degrees of quality. I have met so many people that moved to this city for the schools, only to realize as they had kids hit school age that they couldn’t actually use the school district they thought. (Which is probably why their house was cheaper in the first place.)
- Use the internet to the fullest for information. Realtor.com is a great resource just to see what houses are available. Zillow.com is a good website to use to get estimates of home values, and the site also displays how much homes recently sold for in the area specified.
- If you are married, base your mortgage payment on one salary. If you are single, reduce your salary by 25 percent and base your mortgage off that amount. Do NOT let a mortgage broker determine how much house you can afford (unless it is less than what you estimated). Also, consider the cost of taxes, as some cities are taxed much higher than others. With layoffs and pay cuts being so prevalent, you don’t want to work solely for your house.
- Consider a 15 year loan. Interest rates are lower with a 15 year loan than a 30 year loan, and cutting that mortgage by 15 years will really pay off. Not to mention how happy you will be to be free from that debt in half the time.
- If you are handy, or know people who are, consider buying a foreclosure property. I am not an expert on the foreclosure market, but if the house is in decent shape and not stripped bare, then it may be a fantastic deal.
- Get to know the market months before you consider making an offer on a house. If you take your time and research prices in-depth ahead of time, you will know a deal when you see it.
- Do not think of a home as an investment, but a place to live. You should never count on your home providing money for retirement or anything else. The market is incredibly unpredictable, and a house is not a liquid asset. Obviously, you want to pay the lowest price you can, but do not plan on the home providing you with money in the future.
- Go through your current home and clean it as though you were putting it up for sale. After seeing your house clean and clutter-free, you may realize you don’t need to move at all!
Do you have any tips you would like to share? If so, please leave a comment!