It’s no secret—buying a home is a huge decision.
While you may be excited about becoming a homeowner, this isn’t a life change you’ll want to rush into. In order to make this process run smoothly, there are some precautions everyone should take before committing to their forever home.
Don’t sign anything just yet! First, read these four things you need to know and do before buying your first home.
1. Check the Taxes on The Property
Being able to afford the home of your dreams is thrilling, but it’s important to make sure you can continue affording it as time goes on.
It’s crucial that you check the yearly taxes on a property before signing any contracts. Additionally, you may want to meet with local government officials to determine whether or not property taxes are scheduled to increase in the next few years. True financial responsibility means preparing for the future, not just affording the present.
2. Understand Zoning Restrictions
If you have renovation, commercial, or other plans for your property, it’s important to check zoning restrictions imposed by the town before you make a decision. These restrictions can be surprising, and may regulate actions like:
- Renting out the property
- Building other structures on the land
- Starting a business out of your home
It can be disheartening when your dreams are squashed, but it’s important to buy a house that fits all your needs!
3. Flesh Out Your Mortgage Options
A typical lender may have high standards when it comes to mortgage candidates. Factors that can affect your eligibility for a mortgage loan include:
- Credit score
- Down payment
- Income-to-debt ratio
What you may not know is that some individuals can qualify for easier mortgage options, like protected veterans.
The difference between a conventional or VA home loan? A VA home loan has lower credit and down payment standards (or often no down payment at all), making it possible to finance the home you want without draining all your funds.
4. Know the Insurability of the Home
Some properties will be turned down by insurers based on factors like:
- Prior insurance claims – Prior insurance claims on the property can lead to higher rates for future buyers. It’s important to investigate whether the home you’re interested in has a lengthy loss history. Previous damage to the property can be disclosed through the real estate agent or with a home inspection (which should always be conducted before committing to a purchase).
- Location risks – The location of your property can have a major effect on insurance costs. If you live in an area prone to natural disasters, you may be denied by insurance companies or forced to pay for additional coverage. For example, you may want to live near the beach, but are you willing to pay extra money each month for flood insurance? Distance from a fire department and populated areas are two other location characteristics that can raise your insurance rates, as well.
- Condition of the property – The current condition of the property will have a significant impact on insurability. It’s important to check the inner mechanisms of the home, in addition to the surface level aesthetics. The last thing you want is to get stuck with a lemon that no company wants to insure!
Dip Your Toes Before Diving In
Buying real estate shouldn’t be a cannonball. The trick to finding your perfect home is easing your way into it, little by little.
Before you make any commitments, you’ll want to know every piece of information possible. Once you’ve fully vetted all your options, you can make an informed decision and choose the right property for you. Buying a house can be stressful, but you’ll thank yourself later if you do it right!