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Buying Your First House? Here Are 25 Questions to Keep in Mind

Are you a first-time home buyer? Before you settle on a house, asking yourself, your lender, and your real estate agent some key questions can help you prepare for a seamless home buying process. Check out these important questions to ask when buying a house!

Questions to Ask Yourself

Young Man Sitting on a Couch Thinking. Photo by Instagram user @jfremouw

Photo via @jfremouw

As you begin house hunting, you’ll want to answer these questions to get a better understanding of what you can afford and what you should look for in your home search.

What Are My Future Goals?

Whether you’re in the market for a starter home you plan to stay in for five years or the forever home you want to retire in, you should consider your goals when looking for homes. Take some time to think about your future. For example, if you plan to start a family, you may want to find a multi-bedroom home in a good school district. Also, give thought to your financial goals because buying a home is a big investment.

What Are My Must-Haves?

It’s smart to make a list of home features that are important to you before you start your house search. That way, you know which features to look for as you start touring houses and working with your real estate agent. Your must-haves can be things like a fenced yard, short commute, finished basement, and more.

Which Neighborhoods Are Best for Me?

Think about the different areas in your city or the city you’re moving to, and which neighborhoods will fit your lifestyle best. Do you want to be close to your child’s school or your job? Are you hoping to be near restaurants and nightlife? Which neighborhoods have your preferred home styles? Making a list of a few ideal neighborhoods will help narrow down your search!

Do I Want a Fixer-Upper or Turnkey Home?

When it comes to finding the perfect home, there are tons of options out there. Opting for a fixer-upper may lower the home’s purchase price and give you free rein on making the exact updates you want. However, it’s important to keep in mind that renovations can be costly, so you’ll need to budget for them ahead of time. On the other hand, while move-in ready homes may have a higher purchase price, they can save you time and labor on updates.

Do I Need to Purchase Additional Furniture?

If you’re moving from an apartment or rental home, you might need to purchase additional furniture to fill the rooms in your new house. Do you need an extra bed for the spare bedroom or a dining room table? Make a list of the furniture items you plan to buy so you can get an idea of how much everything will cost.

Do I Plan on Using Moving Services?

This is an important budgeting question you should ask yourself as you start your home buying journey. Packing, loading, and unloading everything by yourself can save you money, but it can be a lot of work. Moving companies will do the heavy lifting for you, but it’ll be more costly. If you have a lot of items to move or are moving to another state, a moving company can be really helpful. Whether or not you decide to hire professional movers, be sure to budget money for the service and moving supplies.

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Questions to Ask Your Lender

Women Sitting and Talking Through a Document with Another Woman. Photo by Instagram user @homewithhiggs

Photo via @homewithhiggs

Talking to a mortgage lender will help you learn more about what you’re able to afford, and they’ll be able to break down the finances of buying a house. Ask your lender these questions so you can get a better grasp of down payments, home loans, and more!

What Can I Afford?

As far as questions to ask your mortgage lender, this is one of the most important. They’ll be able to help you figure out a number based on your income, credit scores, assets, and more. As a starting point, it’s recommended that you don’t spend more than 28% of your monthly gross income on your mortgage. However, you’ll also want to take into account other costs like property taxes and homeowner’s insurance. This conversation will help you determine how much you’re able to pay for your home.

Do I Qualify for a Loan?

Your lender will take many factors into account when approving you for a loan. They’ll look at things like your income, credit score, and assets to determine if you’ll have enough money for your down payment and other costs. One major part of qualifying for a home loan is your debt-to-income ratio (DTI). In order to qualify for most loans, you should aim to keep your DTI below 50%.

Which Type of Loan Is Best for Me?

There are a few different types of mortgage loans out there that home buyers can apply for. Common types include FHA loans, conventional loans, and VA loans. These all vary in their rates, terms, and qualifications, so be sure to talk to your mortgage lender about which type is best for you.

How Much Do I Need for a Down Payment?

Your home’s down payment will be one of your biggest financial responsibilities. Typically, you should aim to save as close to 20% of the home’s purchase price as possible. Putting more money toward your down payment can help you pay less in interest fees and give you more equity from the start. Being able to invest more in a larger down payment can also help you show sellers that you’re prepared to buy and handle the finances of homeownership.

What Will I Have to Pay in Closing Costs?

When you purchase a home, you’ll also pay closing costs, which are fees associated with the purchase. These costs are things like the application fee to the lender, appraisal fee, home inspection costs, a few months of property taxes, homeowner’s insurance, and more. But these can vary depending on where you live and what type of property you buy. As a home buyer, your closing fees will typically range from 2% to 5% of the home’s purchase price. Keep these costs in mind when budgeting for a house!

Should I Open an Escrow Account?

An escrow account is used to pay property taxes and homeowner’s insurance premiums. The exact amount needed for the escrow is added to your mortgage payment each month and done automatically so you don’t have to worry about late fee penalties. While not completely necessary, they’re a common financial tool, and depending on the type of home loan you have, you may be required to open an escrow account.

What’s Included in My Monthly Mortgage Payment?

There are a few things that will be included in your monthly mortgage payment. These include the principal loan payment, mortgage interest rate, property taxes, and homeowner’s insurance. Other fees that you may have to pay each month include Private Mortgage Insurance (PMI) fees and homeowner’s association (HOA) fees.

What Will My Interest Rates Be?

Your lender will have two interest rates when you work with them. Base interest rates are what you’re charged on the mortgage. Then, there’s your Annual Percentage Rate (APR). The APR will be higher because it includes the base interest rate, plus the loan closing costs. The larger the difference between your base rate and APR, the more the lender is charging you in fees, so make sure to pay attention to these numbers.

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Questions to Ask Your Real Estate Agent

It’s a good idea to find a real estate agent so you can sit down and ask them some questions about buying a home. They’re a great resource for all things house hunting and buying. Here are some questions to help guide your conversation with a real estate agent!

Can You Explain the Home Buying Process?

As a first-time home buyer, the process of buying a home might feel somewhat confusing. Finding a real estate agent who will walk you through the home buying process from start to finish can help you better understand what to expect and clear up any questions you might have.

What Should I Look for When Touring a Home?

A real estate agent can help you know what type of things you should keep an eye out for when viewing houses. Learning things about a home like age, lot size, nearby traffic noise, damages, and more makes it easier to decide whether or not a home is an adequate fit for your household.

What Are Similar Homes Selling For?

Ask this question so you can get a feel if the house you’re looking at is set at a fair price for its size, amenities, and location. Your real estate agent should have a solid understanding of how much certain home types have sold for in your desired area.

Which Neighborhoods Have an HOA?

If the home you buy is part of an HOA, you’ll be expected to pay dues toward the upkeep of your neighborhood. They can vary in price depending on the area. Your HOA fees will cover services like trash removal, pest control, and snow removal, as well as community amenities like a neighborhood pool. As you begin narrowing down which neighborhoods you want to live in, ask your real estate agent which areas have an HOA and consider whether or not you’re willing to budget for those dues.

How Long Has the Home Been on the Market?

Knowing how long a house has been for sale may be able to help you negotiate a lower asking price, especially if it’s been on the market for a long time. There also may be a major reason why the home isn’t selling, which is something you’ll definitely want to know before putting in an offer. Housing markets are constantly changing, so low demand could be another reason why a house has been on the market for a while.

When Was the Home Built?

This question can help you determine if a home is right for you, depending on what you’re looking for. An older home may have a unique charm that you’re after, but keep in mind that you might have to make necessary updates to it in the future. A newer house most likely has more recent upgrades, which can save you some time and money, but it may not have some of the characteristics you want.

Have There Been Any Major Updates?

You’ll want to get an idea what kind of updates have been made to the house so you can prepare to make them yourself if needed. Has the roof had any repairs lately, or will you need to replace it? Have there been any room additions to the home? When was the last time the doors or windows were updated? If there have been renovations of any kind, it can be helpful to get the contact information of who did the work for future reference in case anything goes wrong or more updates need to be made.

Are There Any Disclosures?

A seller legally has to disclose any issues with a house, so be sure to ask your real estate agent for a list of problems, if there are any. That way, you can know if the appliances are in decent shape, how the systems are working, or anything else that’s going on with the home before you decide to put in an offer.

What’s Not Covered by an Inspection?

You should make sure a potential home passes a home inspection to avoid any costly replacements or upgrades in the future. What’s included in a home inspection varies, but some things typically not checked for are asbestos, mold, lead, and more. Your real estate agent will be able to give you a more comprehensive list of what might not be covered in the home inspection.

What’s Included in the Purchase?

Once you have a couple of your top houses narrowed down, have a conversation with your real estate agent about everything that would be included in the sale. It can’t always be assumed that home appliances like refrigerators or washing machines, shelving, wall mounts, and other features will come with the purchase, so you’ll want to be prepared in case you need to buy any necessities or adjust your offer.

What Expenses Can I Expect After Purchasing a Home?

It’s good to know what kind of costs you can expect after you purchase and move into your new home. Your real estate agent will be able to get you a complete list, but a few home expenses to think about are your monthly mortgage, utility bills, and repairs.

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