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10 Tips For Buying A New Home

September 7, 2010 · 51 comments

in Home & Garden, Misc Tips, Personal Finance

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:

  1. 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.
  2. 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.
  3. 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.)
  4. 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.
  5. 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.
  6. 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.
  7. 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.
  8. 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.
  9. 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.
  10. 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!

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{ 41 comments… read them below or add one }

Nicole September 7, 2010 at 8:20 am

Our house has changed (elementary) school districts once and is about to change school districts again since we bought it.

We did make the mistake of buying too much house. But we did buy something we could afford on just one income… mainly because DH didn’t have a job yet.

A smart realtor will almost always be able to get you to buy a house on the top of your price-range. It might be a good idea to keep that price point to yourself.

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Kris September 7, 2010 at 10:55 am

Nicole – wow, your house changed school districts? Here, part of the city might end up getting sent to a different school, but always within the same district. Do your taxes and such change too? In my subdivision, the north part goes to one school district and the south part goes to another. One district is higher regarded than the other, so the property values are greatly affect by north vs south, even for the exact same house. I cannot imagine the upheaval that would happen if they redistricted our subdivision, because some literally lose home value overnight.

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Nicole September 7, 2010 at 1:39 pm

No, just the elementary schools are being redistricted, again. Same overall district, different elementary schools. It is a small town.

No, no changes in taxes, except that property values are going to drop, even though the city will not recognize that drop and make us pay higher taxes anyway.

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Kris September 7, 2010 at 9:54 pm

Nicole – by a miracle, my taxes finally dropped this year, for the first time yet. (And housing prices have dropped for many years now, unfortunately.)

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Money Reasons September 7, 2010 at 9:54 am

#3 was interesting! I didn’t really think about that since I’ve always lived in or around small cities!

My tip would be for people to check into townships instead of moving into the actual city. Often, a township will go to the same school as an adjacent city, but with the township, you may not have to pay real estate taxes on your house 🙂

Where I live, the biggest houses are out in the townships, while the city has more modest sized houses like mine… If I were to look for a new house again, I would definitely keep that in mind 😉

The only caveat would be that there is a good chance that eventually the city will gobble up pieces of the township adjacent to it, especially if it bring the city in tax revenue!

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Kris September 7, 2010 at 10:53 am

Money Reasons – I guess I never really thought about a township vs. a city. We just always looked for something somewhat centrally located because traffic can be a nightmare around here. I know I pay a lot of taxes, that is for sure, and I could also get more house if I moved further out. But, it just wasn’t worth it considering my husband’s work commute. For some though, it is well worth it.

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Money Reasons September 7, 2010 at 11:48 pm

That makes sense! In the small city that I live in, it only take 5 to 10 minutes to get into the heart (lol) of the city from anywhere, be it our city or our adjacent township

Golly, Just don’t say I live in Mayberry! 😉

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Kris September 8, 2010 at 8:40 am

I would love to live in Mayberry – as long as it was in color… 🙂

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Sandy L September 7, 2010 at 1:15 pm

Tip 11.

When you find the house you want, go to the registry of deeds and see how big a mortgage was taken out on the property and when. It’s part of the land records. My registry of deeds is online and free to the public, but it is a public record that anyone can access, even if it’s not online yet (like going down to city hall).

Tip 12.

When you first start looking, many realtors will first show you the dumpy houses that have been on the market a while that they haven’t been able to move. (At least a few here did). Once they know you’re serious, they’ll start showing you the better places. It’s always best to do your own homework on what’s out there. They are looking out for themselves for the most part.

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Kris September 7, 2010 at 9:55 pm

Good tips Sandy. That is one good thing about the internet, you can do so much looking yourself ahead of time. I always told my realtor what I wanted to look at instead of the other way around. But, many people will just trust and follow.

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Budgeting in the Fun Stuff September 7, 2010 at 2:45 pm

We seemed to follow the same play book, lol. We were looking for 3 bedrooms and 2 1/2 baths in a good school district since we knew it would be easier to resell when we were ready to move to a bigger house in 10-15 years. So far, so good. 🙂

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Kris September 7, 2010 at 9:50 pm

BFS – Are you still planning to move after 10-15 years, or do you think you will just settle in your current home for the long run?

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Mandy June September 7, 2010 at 5:31 pm

Couldn’t agree more with ya on the sizing of the house. A few of my friends purchased huge starter homes. Homes that they prob wouldn’t fill up even 10 years down the line. I guess that if it makes them more comfortable to have a big home then that’s on them but for those of us who are money conscious, a huge home might be something to rethink. Not only will the home be more expensive but think about the cost of furniture for a bigger place. You’re spending lots more.

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Kris September 7, 2010 at 9:50 pm

It is amazing how much house some people will by, and I am sure some of the rooms are barely ever used. Heck, I barely use my living room, and I have 3 kids. However, I had no choice but to get a house with family and living rooms since I needed four bedrooms. However, I cannot imagine having thousands of extra square feet.

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Nicole September 7, 2010 at 9:57 pm

We got a huge starter home… we figured we would fill it up with 2 kids and separate offices, and didn’t want to have to move once kids came along. In retrospect we probably could have gotten a 2000 sq ft house and still not moved. We were so excited not to be living in a teeny apartment (and at a mortgage smaller than our old rent!) that we really didn’t think it all through.

But, we have discovered that furniture is only an additional expense if you actually buy it. Maybe one of these days we’ll get around to getting that second living room set, but right now having a single set split up across two rooms is working. Sparse and open seem to be working out ok for us. I’m guessing most people don’t just go, “Well crap, after spending all our money on down payment, closing costs, and fixing gas lines, we don’t have any money left for furniture” and then not get around to getting any for 4+ years.

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Lola September 7, 2010 at 9:40 pm

Go look at the house (and note what the neighbor are doing) at some different times if at all possible – such as on a Saturday night (is it noisy?), during a rainstorm (always good to see how the water flows out of the gutters and through the yards), on a weekday (anybody home?), etc.

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Kris September 7, 2010 at 9:48 pm

Good ideas Lola! I also used to drive by at school bus pickup time so I could get an idea of how many kids were in the neighborhood.

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Sandy L September 8, 2010 at 9:08 am

Oh, one more tip if you’re brave enough to do it.

Knock on the doors of the neighbors and talk to them. We were looking at a house recently and my husband did this. We learned TONS about who else was looking at the property, what the neighborhood was like, etc. Most people want to know who their prospective neighbors will be so they’ll be happy to talk to you. If they don’t talk to you, well that says a lot too…do you really want to live there?

Think about your house. Would you talk to someone who was looking to buy the place next door to you and see what they were like? So, don’t be afraid they’ll mistake you for a door to door salesman. Most people are oool about it.

Great post..I may just have to expand on this idea.

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Kris September 9, 2010 at 3:04 pm

Sandy L – that is a very good idea. It would be great if you could catch people doing yard work or something. I usually just kept driving around the prospective home, probably looking like a stalker…

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Financial Samurai September 8, 2010 at 9:55 am

My best tip is definitely to always know there will always be another “perfect home”, so don’t rush, and don’t fall in love!

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Kris September 9, 2010 at 9:05 am

Samurai – you are very right, there will be many ‘perfect’ homes out there if you keep looking. Especially with all the homes on the market right now.

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Little House September 8, 2010 at 10:57 am

Great tips, especially #5 – basing it off one salary and not two is a very smart idea – especially in today’s economy. Also, tip #9 is something too many people tripped into in this last housing market bubble; the idea that their home was going to make them rich. I just posted a book review about renting vs. buying and this was one of the points the author made: a home is a place to live, not necessarily an investment. Thanks for sharing these solid tips!

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Kris September 9, 2010 at 9:07 am

Little House – I used to think that buying a home was definitely the smarter decision, but now I am not so sure. I think about the money we have sunk into this house for remodeling and repairs, along with taxes, and renting may have made more sense. (Considering that the market has dropped so much.)

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The Biz of Life September 8, 2010 at 3:20 pm

Great advice…. I liked tips 9 and 10. Buying and selling houses frequently is a loser’s game– all your profits get eaten up in closing costs. Sometimes you’re just better staying put or building an addition onto your current house. I’ve seen that done on a number of homes in my area and it dramatically transformed those homes.

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Kris September 9, 2010 at 9:08 am

Biz – I do wonder how house flippers are doing now days. I will say we ‘made money’ on paper on our other houses. However, if you consider the money we put into the houses, we probably would have made more investing in CDs!

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Kevin@InvestItWisely September 8, 2010 at 3:47 pm

I started out living in an el-cheapo apartment in a building populated by people on social assistance — it wasn’t as bad as it sounds, but I had new teenage neighbours that moved in about a year before I moved out, and they drank and smoked marijuana all the time. They also had three kids and they either fought all the time or had loud sex that everyone could hear through the paper-thin walls. The police had to come a few times… :S

The apartments I’ve lived in since then thankfully haven’t been as ghetto, though that place had its charm!

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Kris September 9, 2010 at 9:09 am

Kevin – I think living in that apartment would have been fascinating, for awhile. Then it would probably get old, and probably a little scary.

It is amazing how just one bad neighbor can totally ruin your living experience.

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The Wealth Artisan September 8, 2010 at 6:12 pm

Hey Kris,

I think it is so funny that you posted this just 1 day before my post went up, lol! You have some excellent tips here. I think one of the most important is, like you said, don’t buy too much home. There is so much extra cost beyond the price that many forget to consider. Heating, cooling, insurance, tax, repairs, etc. A bigger house won’t have the same maintenance costs as a smaller one, that’s for sure! Great read!

Thanks,
Timothy

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Kris September 9, 2010 at 9:12 am

Timothy – I will definitely have to come read your article!

Every time I see a giant house I think ‘what do they do with all that space’? Even if you had giant parties every night, there would still be spare rooms I am sure. (Well maybe not if they were really good parties and a lot of people had to sleep over…) I suppose some have money to burn. I would just rather give burnable money away rather than waste it on a giant home.

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Andrew September 9, 2010 at 2:41 am

I think the best tip here is the first one: don’t go after a big house even if it seems like a great deal. There is just too much risk involved for something you don’t need. Look for something you DO need that is ALSO a great deal.

Great tips here Kris!

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Kris September 9, 2010 at 3:07 pm

Andrew – I agree! There are so many homes available out there that I am sure you can get a great deal on a home in any price range. I admit I have walked into beautiful homes that I would love. But then when I look at the monthly payment, my rational side snaps back into place and I get more realistic!

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Squirrelers.com September 9, 2010 at 10:04 pm

This is one of my favorite articles of the week. Very good list of tips. I think #8 and#9 especially resonate with me. I absolutely believe in extensive research, and trying not to lose money (in this environment). I find it amazing how some folks can make such a big decision and commitment so impulsively and emotionally.

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Kris September 10, 2010 at 10:09 am

Thanks for the kind words Squirreler!!

I do think people see something they like, and jump right in prematurely. I can’t imagine being in the market right now because there would be so many houses to choose from. I would really be taking my time right now!

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cynthiapellan @ HomeLoanFinder.com.au January 6, 2011 at 12:50 am

“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.”

I couldn’t agree more. A house you love to spend time with is a well-spent purchase. Here you will build memories and these memories will be priceless, no amount of “investment” schemes could ever buy you cherished memories you shared with loved ones.

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Kris January 6, 2011 at 7:55 am

As my house gets older, I see it more as a money pit that I adore. I love my house and I cannot imagine leaving it. Well, not until I have to pay for the driveway this summer and new siding next year…

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Positive Cash Flow Property April 2, 2013 at 5:07 am

I am an investor and buying and selling homes is my hobby and a part of my job. Thanks for sharing this interesting post. I like the tips.

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Buying Investment Property April 24, 2013 at 12:21 am

First time home buyers need many tips on buying a new home. It is easy to get distracted by all the wrong things, and miss the entire point. There are four things important to a home: foundation, floor, roof and walls. Nice blog!

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We Buy Houses As Is May 10, 2013 at 6:03 am

The article is a handy resource for all home buyers. There are also some factors to be considered by a house buyer if they desire to buy their property through an real estate company. These are as follows:

* Competitive price of the property
* Fast and hassle free service provided by the real estate owner
* Whether the real estate company offers any redemption on commission or not
* If there is any further expenses or improvements
* If the agent of the company can handle all the official paper works as it is very complicated to understand for the common people

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Ann Daniel August 1, 2013 at 6:12 am

Great post, Always ask for your neighborhood before buying the property, you need to determine what kind of neighborhood you want to live in. if you bought a property in a neighborhood you don’t like then you do have a serious problem
Regards,
Ann Daniel
http://www.smart-realestate.com/en/

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Elisa Jed August 8, 2013 at 1:05 pm

I would also add to make sure the house you are buying doesn’t have little problems. Something like a disconnected eavestrough can cause unexected problems in a new house. I was glad I looked into my Calgary eavestrough before buying because it was cracked all up the side.

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Buying NJ Homes August 21, 2013 at 1:49 pm

Before buying a new house you always consider the area of the house if it is very accessible to markets, stores, highways and hospitals. That is what I learned being a Real Estate agent. It is best if you hire real estate agent because they will be the one to process all the necessary actions.

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