The process of finding the perfect home can be complicated. It is easy to feel lost given all the factors you have to consider before closing. Your priorities are different from other people looking to own a home. However, in this article, we provide an outline you can use to create your own checklist.
Find a Suitable Location
A perfect home is many things for different people. Some may prefer single-family homes with a yard that has adequate levels of privacy. Others would rather avoid the maintenance work and instead opt for a home managed by associations.
Before you begin the process of finding the perfect home, you should have a clear picture of what you want. That way, you will quickly recognize the house you need the moment you walk through the door.
It is advisable to do some preliminary research on commercial real estate options. Take the time to jot down what you want for your dream house. You can skim through property website listings so that you can have a concrete plan.
Some of the things to look for include:
- Floor plans
- Access to work, schools, and colleges
- Size of backyard
- Proximity to amenities
Due to overcrowding in urban regions, many people are considering neighborhoods designed for work and play. Tools like Walk Score can provide useful data when you need to evaluate the area’s friendliness to pedestrians.
Walkability tools utilize algorithms to determine the density of the population, pedestrian zone, and safety. Places with high walkability points are healthier, environmentally friendly, and have many socioeconomic benefits for residents.
It is not prudent to ignore the walkability score when you are in the process of finding the perfect home. Independent studies suggest that it can raise the value of your home. You should also drive around the neighborhood to determine if you’d feel comfortable living in that area.
Finding the Perfect House
Once you’ve decided where you’d want to live, there are other factors to consider when finding a perfect home. Your needs and preferences will ultimately be your guide at this stage. But there are things you should not overlook when examining aspects of the house you want to buy.
- Insulation: One of the most expensive aspects of owning a home is maintaining your AC systems. Statistics indicate that your heating and cooling needs account for approximately 54% of the utility bills. You should, therefore, ensure that the house has adequate insulation for cavity walls and the basement.
- Energy Rating: Some homes already have adequate insulation. The assessment includes appliances and systems installed in the house. It also considers the building’s exposure to daylight and ambient heat. According to the US Department of Energy, a residential building with a score of more than seven can save $573 annually.
- Layout: Don’t just look at the floor plan, but also whether it has the necessary space to fit your household items. If you think you’ll need to move specialty items such as a piano, you need to review the size and dimensions of where to keep it before making your decision. You don’t want to move to a new home where some of your items will be lying idle in the basement.
- Storage Accessories: Evaluate the storage fixtures in the kitchen and bedroom. What is the condition of the kitchen cabinets? Does the bedroom have the necessary storage features? Without the right fittings, it will be hard to keep your home decluttered.
- Age: A new house may have modern fittings and upgraded utilities. However, they may lack the warmth and style of an old building. On the other hand, older homes often need upgrades. For example, you may have to replace parts of the house e.g. the roof meaning you’ll need to hire a roofing company. Aging buildings also require a lot of maintenance because some systems, like the HVAC, are outdated.
Prepare Your Finances
In the course of finding the perfect home, you’ll need documentation to show the state of your finances. You will be required to avail paperwork on your mortgages, tax returns, your income, and employment situation.
Your loan needs to be approved before you finalize the process of finding the perfect home. You may have to clear with your lender and bankruptcy attorneys. The closing process may call for you to pay some last-minute expenses.
If you recently filed for bankruptcy, an attorney can guide you when you are trying to get a government-guaranteed loan. Most lenders demand that you wait for a given time before you can apply for a loan after bankruptcy. The fastest option you have is applying for loans such as USDA, VA, and FHA.
Months before you begin the process of finding the perfect home, you should ensure you have the financial prerequisites. Some of the requirements may include:
- Credit Score: It is difficult to establish precisely what FICO score is acceptable to lenders. While the Federal Housing Administration (FHA) can accept a score of 500, it is better to keep it above 700. You also need to clear your bills before trying to secure financing. That is why you should set aside time to prepare before looking for a new house.
- Fair Interest Rates: You also need time to go through offers from different lenders. Getting the best rate will help you save thousands of dollars for repaying your mortgage. You can explore different types of offers ranging from community banks, credit unions, and online lenders.
- Down Payment: Most lenders will require a down payment that is equivalent of 3.5% of the home’s selling price. Financial institutions have been implementing strict conditions for a down payment, since the housing crisis. Therefore, if you have found the perfect house it may be taken if you don’t have sufficient capital.
- Debt to Income Ratio: Lenders may decline your application if your debt-to-income ratio is high. The Consumer Financial Bureau stipulates that the rate should not exceed 43%. Even when you secure financing, you may not be in a position to pay after buying a house. It is, therefore, advisable to calculate the expenses you may incur after moving to your new home.
- Closing Costs: Other than the capital for buying a home, you should prepare for additional expenditure. Closing costs are any expenses incurred by both the buyer and seller in the process of completing the transaction. Lenders are legally obliged to provide clear information on the costs involved during the process. They can vary from one property to the next and may include commissions, taxes, insurance quotes, among others.
Do a Home Inspection
A home inspection is a crucial part of the process of finding the perfect home. The aesthetics alone should not affect your decision when you want to locate an ideal house. The building has structural and mechanical factors that make up the living space you may soon call home.
Even before you hire an inspector, you should evaluate the house at least twice. During the first walkthrough, examine the floor plan and try and visualize your furniture and decor in that space. During the second visit, check the conditions of the walls, ceiling, plumbing, and appliances.
Once you are satisfied that it is the kind of house you want, you should organize to have a home inspection. There are two reasons why you shouldn’t ignore this step when in the process of finding the perfect home.
The first reason is that a visual inspection by the buyer does not always expose hidden problems. You may find that you need to hire a pest exterminator, even though the house appeared to be in impeccably condition. An inspector can unearth such issues, which will help you to make the final decision before closing.
The second advantage is that you’ll have a formal report that you can bring to the attention of the seller. You can discuss the cost implications of you having to rectify the defects and structural problems before you close the deal. Alternatively, the homeowner may decide to hire a floor or roofing contractor to repair the defects.
Some buyers may choose to buy a house even when there are structural problems within the building. You may find a perfect home that will need the services of a contractor. An inspection can give you a clear picture of whether you can rectify the issue at a reasonable cost.
You can expect an inspection to last about 3 hours. It is advisable to be there during the inspection. The process should produce a written statement with estimates for fixing the damage. The report will have a breakdown of the costs for services ranging from roofing contractors to electricians as well as the cost of acquiring materials.
Consider a Remodel
While an estimated 40 million Americans moved to a new house in 2018, statistics show 60% are open to a remodel. Homes requiring repairs and upgrades have a considerably lower cost per foot than homes in perfect condition.
But it is crucial to know when you should renovate and when to look elsewhere. One of the significant factors that will inform your decision is whether you have access to financing. You don’t want to live without your HVAC or water supply after finding the perfect home.
Some repairs may require investing thousands of dollars into improving the property. One rule of thumb is not to go beyond 80% of the equity of the home. You can exceed that level only if you intend to stay in the same house for more than five years.
Another factor you need to think about is the nature of the renovations. Renovations that involve plumbing or the structure of the building can be risky. Such projects are often prone to time and material constraints. Your budget will often go beyond the initial estimates, and that can be a nerve-wracking experience.
Closing the Deal
You can expect to deal with tons of paperwork with details on finances and terms of the agreement. A commercial real estate attorney can help you navigate through the often-overwhelming tons of information.
A real estate attorney should be with you through the process for renegotiation of the contract where necessary. There may be structural or remodeling issues that an attorney can assist you with and allow you to save money. They can ensure the deal is fair and legal.
Another advantage of hiring an attorney is that they can do legal research for you. Homebuyers often put aside many of their day-to-day activities to complete the process of closing a deal. The rush drives many people to make decisions that they regret later.
A commercial real estate attorney can go through the documentation. Some of the paperwork your lender will require may include:
- Tax declaration forms
- Seller’s affidavit
- The deed for the property
- W-2 forms for employment verification
Before Moving to a New House
As you go through the last stage of finding the perfect home, you should realize that no house is perfect. Your home ownership journey has just begun, and there are steps you can take to prepare for the future.
Start by reviewing your home warranty and understand what is in the statement. If you don’t have a policy, consider shopping for one that fits your needs. You can get a home warranty that covers your water heater, furnace, and air conditioning system. /p>
Use your home inspection report to determine the repairs and maintenance tasks you’ll schedule next. List down the things that you will have to address quickly to avoid a disaster later. You may also need to either hire a junk removal service or get a dumpster rental to get rid of all the trash.
After addressing the most critical aspects of repairs, create a home maintenance schedule. It is easy to forget simple tasks such as cleaning the gutters before you establish a routine. Put aside about 1% of the purchase price for fixing your HVAC, cleaning the carpet, and sprucing the exterior.
There are many aspects to consider in the course of finding the perfect home. You can always hire roofing technicians and piano movers to reduce risks and minimize losses. The points here are an outline that can serve as a useful guide. Be sure to take time and don’t let anything rush you when making decisions.