What Are the Top 10 Questions I Should Be Asking When Buying a Home?
Asking the right questions can save you, big time, when it comes to purchasing a new home. Here is a quick listing of the 10 most important questions to ask when purchasing a new home:
- What is my budget?
If you visit a home that is two or three times your budget, of course it will seem like a really nice place to live! The reality is that too much home could lead to big problems down the road in terms of cost. You really need to know how much home you can afford, and this all starts with talking to your mortgage broker.
The listing price of the home is not the total cost of purchasing a new home. There are additional costs in the form of home inspections, property taxes, insurance, and other fees associated with your purchase, and all of these will be included in your budget.
- Is the home located in a flood zone or prone to any other type of natural disaster?
Costs can begin to creep up when your home is located in a flood zone or other natural-disaster-prone area. Flood zone insurance is required, for example, when your house is in a federally-designated high risk flood zone. We recommend that you talk to an insurance professional to purchase enough insurance to cover the value of your home should you need to rebuild after a disaster.
- What is the neighborhood like?
There are a few dimensions to the question about your potential future home’s neighborhood. The factors to consider in a neighborhood are things like neighborhood amenities and your neighbors. It can be worthwhile to ask the owner a few questions to get a feel for the neighborhood, but always be aware that the answers are subject to the owner’s own experience. Other resources to consider include your real estate agent or online communities.
- Are there any health or safety hazards? A home inspection should help you uncover any major issues with the prospective home, but don’t be afraid to ask specifically about any encountered issues with the home. Some common hazards, particularly with older homes can include mold, asbestos, lead paint, and radon. If your inspection uncovers something suspicious, additional testing may be required at an additional cost.
- Why is the seller selling? There are many reasons that a seller is ready to move. Understanding why your seller is moving can both uncover hidden problems and perhaps aid in price negotiations. A motivated seller may be ready to come down on the price to meet a job relocation deadline, where a retiree may need to capitalize on the best price for his or her home to help their retirement plan.
- Have there been any major renovations or additions to the house?One thing that you might uncover in the search for a new home is that listings sometimes don’t quite match their descriptions. Often this is because renovations have changed the home and are not accounted for in previous appraisals, sales, or tax details. Asking about major renovations or other changes can shed further light on the details of a home.
- How much have other homes sold for in the neighborhood? Your real estate agent can pull a list of comparable homes (or “comps”) to verify that you’re not overpaying for a home. Similarly, an underpriced home may yield clues about undesirable reasons to not buy the house. If the price comes in too low, you may want to ask questions, although you may have truly found a deal! If the price comes in too high, then it may require some negotiation or it may even be time to look at other homes. A list of comparable homes will go a long way in determining what the home is ultimately worth. There is nothing wrong with paying the right amount for the right home, particularly if you want to live there for a long time. However, you do not want to overpay when some negotiation or a different house could potentially cut significantly into your mortgage payment.
- How long has the house been on the market? This is the age-old question in real estate. Knowing more about the listing can yield valuable clues about the desirability of the home, or it can indicate a prime chance for a deal! Homes that sit on the market too long may have something wrong with them or they may simply have begun with too high of a starting price. Numerous price cuts can demonstrate issues selling the home, but they also may be the result of a mistaken or overzealous seller. Credits for upgrades or room to drop the price further out of desperation may be up for grabs. As always, ask the seller a few key questions to get a feel for the situation.
- How much do utilities cost?
Asking for an average utility bill will go a long way in helping you determine the actual monthly costs of ownership for a home. Older homes and larger homes can result in larger utility bills. However, you may be pleasantly surprised by homes that have environmentally friendly renovations or that are newer. Don’t forget that a change in home can yield a larger or smaller suite of utility bills that contribute or subtract from your overall budget.
- What are my total costs? It is easy to concentrate on the sticker price of a home in the same way car dealerships often encourage a focus on the final price on the window. However, a new home can come with large fluctuations in associated fees, insurance, closing costs, and other costs. As we previously mentioned it’s wise to start out with a budget and stick closely to that budget. When you find that perfect next home, go ahead and calculate the closing costs and monthly costs of ownership. Your broker can shed light on typical closing costs, which vary but are often expressed as a percentage of the overall price. Calls to your insurance broker and the local utility companies can provide a good estimate of associated bills. Lastly, the closing disclosure is required by law from your mortgage lender. This closing disclosure will summarize the closing costs associated with the home and will be provided 3 days prior to your closing date.
Asking the Right New Home Questions
Asking all or most of the above questions will help ensure a successful purchase when you find that dream home. Finding just the right home involves research and patience. Often what appears to be a good deal may not, and it can become easy to get caught up in what you want versus what you can afford. Get started today with Range Lending to find and purchase your dream home!