I wish I'd known! Homebuying advice
Buying a home is likely the biggest purchase you’ll make in your lifetime. There is so much information to collect and consider, and so many houses to see! The process can feel exciting and at times overwhelming. We collected the best advice home buyers wish they’d heard before getting started.
1. Hire a contractor to accompany your inspector
Every house will have some problems but don’t rely only on the seller’s inspection report. Hire your own inspector and pay for a contractor’s assessment at the same time. A contractor’s realistic assessment on the scope of repairs and costs will help you evaluate the selling price, plan for the expenses, and may give you better leverage for price negotiations.
2. Research nearby planned development projects
Check with the city’s planning office. What projects are in the works? A new housing development nearby could have a long-term impact on traffic, while plans for a park renovation could make the neighborhood more desirable and increase property values down the line.
3. Monthly payments are more than just your mortgage
Your property insurance and PMI (private mortgage insurance, if your down payment is less than 20%) may be wrapped into your mortgage, but you’ll likely have other costs, too.
- Budget for routine maintenance and repairs, everything from gardening service to leaky faucets. Experts suggest you should budget about 1% of your home’s value, annually.
- HOA (Homeowners Association) fees average $200 – $400 a month. HOA fees are paid by property owners in multi-unit buildings and many housing developments. The fees cover costs like groundskeeping, clubhouse maintenance and trash pickup. If the property you’re considering is part of an HOA, be sure to ask about any larger projects on the horizon that could require a special assessment, such as roads, roofs, or swimming pool repairs.
4. Budget for additional upfront costs
Pulling together a down payment is challenging, so any added expense is usually an unpleasant surprise. When setting up your house-buying budget, include these common upfront fees:
- Inspections and contractor fees
- Moving costs—a local move averages around $1,500
- Closing costs—these are typically 2-5% of the house’s sales price and include items like appraiser fees and title change. You’ll also pay lender fees. This is the category of fees that you should compare very closely as you evaluate lenders.
5. Shop around for lenders
Don’t just go with a lender recommended by a friend or family member. Lender offerings vary widely. Compare rates and fees online, look for reviews and always run a simple online background check (e.g., Better Business Bureau). Half a percentage point might save you thousands of dollars over the life of the loan, but those savings could be reduced by junk fees or a long process that results in rates shifting up.
Pay very close attention to lender fees. These include discount points, document preparation fees, and loan processing fees. Banks earn their profits on these fees. Credit unions are not-for-profit, so they try to keep fees as low as possible for members.
6. Buyer’s remorse is normal, and avoidable
Most homebuyers experience some kind of buyer’s remorse following their home purchase. Usually, it revolves around fear they paid too much or the reality that their monthly costs are higher than they budgeted. Although the feeling almost always fades, you can reduce your risk of buyer’s remorse by having a clear understanding of all the costs and being firm on what you can afford. Psychologists suggest redirecting negative thoughts to forward-focused goals and start decorating to make your new place home sweet home.