The 15 Most Important Questions to Ask When Buying a House
There’s no question that buying a new home is one of the largest financial decisions you’ll make in your life. As such, purchasing a home is a decision that requires research and careful consideration. From navigating home loans to understanding the real estate market to deciding on an asking price, it’s helpful to know what to expect when it comes to homeownership. Whether you’re a first-time homebuyer or a returning buyer, here are some crucial questions to ask when buying a house.
What Are My Total Costs?
From sticking to your budget to understanding closing costs, read on for a list of factors to keep in mind when purchasing a new house.
How Do I Determine My Budget?
One of the questions to ask when buying a home is how much you can afford to spend on your monthly mortgage payment. To answer this, homebuyers can use the 28/36 rule. This rule suggests that a mortgage payment shouldn’t be over 28% of your monthly pre-tax income and 36% of your total debt. If you get financing for your home purchase, your lender will look at a number of components to assess how much you can afford. Namely, mortgage lenders will look at your debt, assets, and liabilities.
How Much Should I Save for a Down Payment?
Research by the National Association of Realtors shows that 87% of homebuyers financed their home. When it comes to making a down payment, most lenders recommend putting down a 20% down payment. By doing this, you will avoid private mortgage interest rates (PMI), which can be expensive. However, it is possible to put down less than 20% on a down payment, depending on your lender, so be sure to explore all of your options before making a decision on which mortgage is best for you.
How Do I Get Pre-Approved For a Mortgage?
If you are planning to finance your home purchase, then it’s a good idea to get pre-approved for a mortgage at the beginning of your home search. Secure quotes from at least two to three different lenders so you can be assured that you’re getting the best possible loan and mortgage payment plan available to you. Getting pre-approved for a mortgage will show sellers that you’re a serious buyer and you have the paperwork to prove it.
Can I Afford to Pay In Cash?
When it comes to buying a house, cash is king. Paying for a new home in cash, if possible, can give you an edge over other buyers. This is because it does not require going through a lender and enables you to bypass the mortgage process altogether, often making for a more swift sale. Plus, buyers will be able to save thousands in closing costs since they won’t be paying interest on a mortgage payment. Not requiring a loan can accelerate the closing process, benefiting both home seller and buyer.
How Much Will I Pay In Closing Costs?
On top of the down payment, you’ll be responsible for covering closing costs. This usually consists of 2-5% of the purchase price, but in California can be closer to roughly 11% of the purchase price. Closing costs usually include the following:
- Loan fee
- Real estate commission
- Escrow fee
- Title insurance premium
- Pest inspection or other inspection
Meanwhile, home sellers typically are responsible for the title transfer fees. In a buyer’s market, buyers sometimes try to negotiate for seller concessions to get the seller to split the closing costs. Fees for closing costs are due at the closing of a real estate transaction.
Are There Other Monthly Costs?
As you’re calculating how much you can afford to spend on a monthly mortgage payment, keep in mind that as a homeowner you’ll also be responsible for paying for additional monthly fees. This includes property taxes, move-in costs, utility costs, homeowners insurance, and a homeowners association fee if applicable.
What’s the Condition of the Home?
When considering questions to ask when buying a home, take into account any issues with the home and red flags during your real estate search.
Should I Get a Home Inspection?
Getting a home inspection will help identify any problems or major repairs needed for the home. In fact, many lenders require a home inspection before offering financing on a home. A home inspector will complete a thorough assessment of the home, including the interior and exterior, to examine immediate or potential future problems. A home inspection typically looks at the following:
- HVAC system
- Electrical system
If a home inspection does reveal any concerning issues, then it’s up to the buyer to decide if they’re comfortable moving forward with the purchase and doing the repairs themselves, or if they’d like to negotiate for a lower offer. The homebuyer can request that the seller complete specific repairs or negotiate to reduce the price.
What’s the Condition of the HVAC System?
When looking at a potential home, you’ll want to know whether the HVAC system is working properly. HVAC, which stands for heating, ventilation, and air conditioner, refers to different systems that improves air quality and keeps your home properly heated or cooled. During the home inspection, the inspector will evaluate the state of the HVAC system.
How Old Is the Roof?
One of the most important factors to consider in a potential home is the state of the roof. If the roof is severely damaged or in need of major repair, this might make mortgage lenders hesitate to give you a loan, as these repairs can be very costly. During the home inspection, the inspector will examine the roof for signs of damage, decay, or mold.
Does This House Fit My Needs?
When making a list of questions to ask when buying a home, be sure to ask yourself, “Does this house fit my needs?”
Is the Location Right for Me?
While there are many aspects that you can change about a house, the one thing that you cannot change is the location. Do you prefer to live in a quiet neighborhood, or do you prefer a neighborhood with a vibrant nightlife? Do you want to live in an area that is walkable? What about living close to shops and restaurants? If you have children, then choosing a neighborhood with a highly regarded school district is undoubtedly a top priority.
Here are some factors to take into account when considering location:
- Quality of school district or school scores
- Proximity to parks and nature
- Neighborhood amenities
- Centrality to work and commute times
- Resale value of homes in the area
- Safety of neighborhood and crime rate
What Are My Future Needs?
While you’ll want to take your current needs into account, think of your future self as well. For example, if you’re thinking about starting or growing your family, you’ll want to be sure that your new home provides sufficient space in order to do this. If you’re interested in a remote job in the future, you’ll want a space that will allow you to do so comfortably. If you’ve always pictured having a couple of dogs, do you need a place with a big yard?
What Are My Must-Haves?
Ideally, homebuyers can find a new home that meets all of their qualifications. Depending on the state of the housing market, this might not be possible. That’s why you’ll want to carefully think about your non-negotiables and what you are willing to compromise on. It’s helpful to sit down and create a list of your needs, both present and future, when deciding if a new home is the right choice for you.
Find Your Dream Home Today
As a first-time homebuyer, you might find yourself overwhelmed by the homebuying process. Buying a home is a big decision, but Aalto is there to guide you through the process. Aalto takes an innovative and consumer-focused approach to assisting home sellers and buyers through its user-friendly online platform.
Instead of going through the traditional route of depending on a real estate agent for information and access to homes, Aalto directly connects buyers and sellers. Aalto’s talented team of experts work with buyers to provide buy-side representation and help through every step of the homebuying journey. This includes everything from home inspections to negotiating a sales price to closing on a home.
From start to finish, Aalto is committed to transforming the real estate process and provides full transparency into the homebuying process. We have talented professionals to guide you along the way and answer any questions you might have. By working with Aalto, you’ll be one step closer to finding your dream home.