Do
You Live a Maintenance-Averse Lifestyle?
Take a look at the garden. If you don't enjoy cutting grass,
then an expansive lawn may not fit into your lifestyle. You
can also evaluate the possibility of future maintenance and
repairs based on the age of the house. If you don't like the
idea of major renovations, a newer home may be your best option.
Is Your Lifestyle
More Geared to a Fixer-Upper Fantasy?
Many first time buyers have them. It goes something like this:
You find a big home in a great neighborhood that's well below
what you'd expect to pay for that house in that neighborhood.
You see a couple of coats of paint, new broadloom, a few repairs
and voilà, a dream home without the nightmare price.
Before you jump headlong into this 'once-in-a-lifetime
opportunity' consider how you'll do all of the work. Will
it be weeknights after a long day at the office, or will you
hire someone? Are you ready to live in a dusty mess as you
renovate? Do a realistic assessment of the job at hand and
be sure to have the house inspected. The last thing you want
is a bargain home that turns into a money pit. You're far
better to find a house that costs a little more each month
but doesn't need much work than to buy a fixer-upper that
eats up hundreds of dollars each month. For example, lets
say you could buy a really nice house with minimal work required
for $10,000 more than a fixer upper. At today's mortgage rates,
assuming you could stay within your monthly budget, that really
nice home would cost you only about $65 per month more than
the fixer-upper. If you buy the fixer-upper, you'll be spending
a lot more than $65 each month to whip it into shape, as well
as the strain your family will go through living in an unfinished
home.
Why is Location
Important?
Of course, the first step in deciding on a new home is your
lifestyle at present and how your lifestyle will change over
the next few years. Are you active in sports? If so, a location
with a nearby recreational facility would be ideal. Are you
a nature lover? Then perhaps an area with parks and walking
trails would suit you. Think about yourself and your family
and decide what you enjoy doing and what type of lifestyle
you would enjoy in your new home.
Which neighborhood
is Right for You?
Your ideal home may not be ideal anymore if it's downwind
from the garbage dump, or if your home is right next to a
freeway overpass. Think about the view. Will you like what
you see every time you look out your windows? Selecting where
you want to live is as important as deciding what type of
dwelling you'd like to live in.
Consider how far your selected neighborhood
is from where you work, how far you're willing to commute
and your lifestyle. You'll also think about schools if you
have, or are planning to have, children. And what about medical
facilities, places of worship, public transportation and recreation?
If you're contemplating the move to an
unfamiliar neighborhood, take the time to go exploring. Walk
around, drive around, get a feel for the distance to the nearest
convenience store, the commute. Make some notes. Take the
neighborhood tour at different times of day.
What Can I Afford?
There are two types of costs in buying a home -- the initial
amount you will need for your purchase and the ongoing costs
of paying back your mortgage along with monthly operating
costs. The largest one-time cost is the down payment. It usually
represents 5-10% of the total price of the property.
Typical One-time Expenses:
- Mortgage application and appraisal
fee
- Property inspection (optional), due
at time of inspection
- Legal fees, due at the time of closing
- Legal disbursements, due at the time
of closing
- Property survey (sometimes provided
by seller), due at the time of closing
- Land transfer, deed tax or property
purchase tax, due at the time of closing.
- Mortgage interest adjustment (if
applicable), due at the time of closing
- Home and property insurance, at closing
and ongoing
- Moving expenses, due on the date of
move
Typical Monthly Expenses:
- Mortgage payments
- Maintenance
- Property and content insurance
- Property taxes
- Utilities
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