What You Should Be Aware of Before Buying a Home

The process of purchasing a house can be overwhelming, complicated, and potentially costly if you don’t know what to expect. When buying a home, there are certain things you should know before diving in headfirst. Read on for eight things you should know about buying a house:

1. Non-refundable Deposit

Before signing any documentation or contracts, make sure it is clear whether the deposit is refundable or non-refundable. Know how much time (if any) you’ll have to pay the money back after your verbal agreement becomes null and void. If the deposit isn’t explicitly stated as such in writing, assume that it’s non-refundable.

2. Mortgage

Obtaining a home loan is undoubtedly the most challenging part of buying a home. You may not qualify for a mortgage if you have bad credit or your debt-to-income ratio is too high. If you think you don’t qualify for one, find out about government programs that can help make homeownership achievable even with less-than-perfect credit.

3. Home Inspection

Before closing on your new home purchase, it’s highly recommended that you get it inspected by an outside party to ensure there are no underlying issues that could come back to bite you after moving in. A home inspection should give you peace of mind and show whether significant renovations are necessary before putting down roots in your new home. This way, you can make the home “livable” right out of the gate.

4. Closing Costs

When you purchase a home, closing costs are incurred just as if you had to pay for moving expenses or other home sale-related expenses. Closing costs vary depending on where you live and which state your loan is issued in – but they’re usually around 2% of the home’s purchase price. Make sure you save up an additional 2% on top of your down payment so that you won’t be stuck with surprise fees at closing time!

5. Painting, Plastering, Repair

Before moving into your new home, it’s normal to want to do some redecorating and maybe even some renovations like painting or plastering. But, you should know that most home loans have a provision called the “punch list” in the paperwork. This means once you move into your home, there are a few minor things that need to be fixed before closing on the house and moving out all of your stuff.

6. Utilities

You might not have considered this before buying a home, but utilities come at a cost—even if you’re living by yourself. In some cases, certain appliances can add extra costs on top of heating or cooling your home. We recommend looking at potential energy costs while shopping for houses. This way, you don’t get stung with an unexpectedly high utility bill after signing on the dotted line.

7. Selling Your Old Home

If you own a home currently, it’s important to know how selling your home will affect your home loan. If you sell your home before buying another one, you might come up short on the down payment if the equity isn’t transferred into the new home’s sales price—or if you don’t have enough cash on hand to make up the difference.

8. Closing Time

The closing time can vary greatly depending on where in the country (or world!) you choose to buy a home. It usually takes 30 to 60 days to complete a home purchase. Still, this time frame can also increase due to complications with title work, appraisals, and other house sale-related tasks that need tending before the ink is put to paper.

9. Renting Out a Room

If you’re considering buying a home with roommates, know that you’ll need to get your home loan approved for the total amount of the house—not just for your mortgage. This is because, should you choose to rent out rooms in the home down the line, your home loan will cover all mortgages on the property, no matter who’s occupying which bedroom.

10. Home Warranties

Home warranties are optional insurance policies that cover repair or replacement costs for home appliances and systems like the furnace, air conditioner, water heater, and more. They usually cost around $50 to $75/year and can be a great way to have some peace of mind living in your home.

11. Maintenance

Just like a car, your home needs regular maintenance to run smoothly. This includes things like changing the air filter every few months, scheduling a yearly home inspection, and more. Make sure you budget for home maintenance costs when considering whether buying a home is right for you.

12. Property Taxes

Property taxes are assessed on the home’s value and usually come due once per year. The amount you pay will vary depending on where you live. But it’s important to factor this cost into your overall homeownership budget.

Knowing the home-buying basics before you dive into homeownership can help give you a better idea of what to expect and make the home buying process less overwhelming.