Today we have a guest post from Tim Richmond. Tim writes about home ownership, real estate and the mortgage industry. He currently writes for the Native American home loan specialists 1st Tribal Lending. His favorite “manly tool” is a Dremel 4000.
Why add more steps? You already have to jump through a ton of hoops before you buy a home. Why add more headache and worry?
It will save you in the long run. Taking your time to do these things before you buy a home is a little like hiring an employee: You can hire the first person who walks in your office and waste time hiring and firing until you get the right person. Or you can take the time, do it right and be proud of your choice. These things, while slightly extensive, will help you choose a home that you can enjoy and live in relatively stress-free.
Rent in the Town in Which You Want to Buy
Each town has a lot more than just the “good side” and “bad side.” There are nuances between the types of people who live in different parts of town – everything from age to ideology. For example, one part of town might be very community oriented while another is a park-in-your-garage neighborhood where people don’t really know each other.
You can do your best to find out which parts of the city are which, but you can’t really know until you’ve lived in the town for a bit. Rent a house (or apartment) and get a feel for the city; then find out which part of town fits your budget and personality.
Savings of $3,000 or More
You’ve probably heard this one: Something will go out and you’ll need to pay for it. But how likely is that, really? And isn’t $3,000 a little rich? Let’s use a central air unit as an example.
No matter how you look at it, a unit lasts until about the 15 year mark. So if you buy a 20-year-old house you probably have 10 years before you need to replace the unit. You might have more; you might also have less. Those sound like really good odds. What if you buy a 25-year-old house? All of a sudden that timeline is looking a lot closer. And, by the way, was the unit put in exactly when the house was built?
My point is that you can’t ever predict when the unit will go out, but according to QualitySmith the cost to replace a central air unit, on average, is about $3,000. Just buying a home is a risk because something will eventually need replaced. I like to live a stress-free life, at least as much as I can manage. Knowing I have the money before it happens provides this security.
Run a Budget…and Keep it Going
I’ve read a lot of “Things to do before buying a home” articles. Most of them suggest that you run a budget to make sure you can afford the payment. This sounds like really solid advice, but it’s only theory. A budget on paper is an unproven plan.
Before you buy a home, write out a budget as if you had bought the house. Run that budget for three months to make sure the theory translates into practice. It’s really easy to write something on a piece of paper and hope it will work out. Don’t fall into that trap. It may be slower to go this route, but you’ll thank yourself in the long run.
Have a Good Reason
I’ve met a lot of military personnel who get stationed in a town and buy a house. I really don’t mean to pick on our military – I admire anyone who is part of it – but this is a bad plan. The same goes for people who buy a home without a reason to stay in the area. Without a solid reason you never know when you’ll decide to pick up and move (or when your CO will move you).
So what’s a good reason? Family and a career path are two of the best, but anything that requires you to stay in that area qualifies. Buy a house because you plan to put down roots, and because there’s a very good chance those roots will stay down for a while.
Conclusion
Almost everyone gets “house fever” at some point. Owning a house provides a sense of ownership that can’t compare. Approached incorrectly, though, and you won’t feel ownership. You’ll feel anxiety, stress and frustration. So take time to do these things before you buy a home. You might regret it now, but you won’t later.
2 comments
Modest Money
November 7, 2012 at 10:52 am (UTC -4) Link to this comment
Good advice Tim. Personally I’d feel more secure with more than $3000 in extra savings before buying a home. You could get particularly unlucky and have to major emergencies that have to be dealt with in your new home. Plus there are always way more expenses in buying a home than you expect. I am considering buying my first home next year, but my problem is with your last tip. I like the city, but I just don’t know if I want to put roots down here and stay long term.
Tim Richmond
November 7, 2012 at 12:22 pm (UTC -4) Link to this comment
Hey, thanks for your comment!
So, you said you’re looking to buy a home. How much do you plan to have in savings? I’m just curious; it might give other readers a more realistic look?
When you say you have a problem with my last tip, do you mean that you disagree with it or that it gives you pause because you haven’t thought of it?
One idea, although it’s not ideal, is to ask friends and family who live in the area what their feel of the city is. They might list off a few attributes they really love, but those could be things you don’t enjoy (stuff to do with commute, whether it’s a close neighborhood city, etc.). If you do ask, just make sure to get more than “I like it” or “I don’t like it.” Try to find out why they say that.