Buying a house is an amazing achievement. It is what so many people dream about doing, but not everyone gets there when he or she wants. The process is lengthy and involved because a home is a major purchase, not to mention the fact the lender takes a chance on the buyer. Unfortunately, buyers sometimes forget about some things before going through with the purchase, which can complicate the process. Being aware of these things and applying that knowledge toward the home-buying process can make it move much smoother than it would otherwise.
Commonly Forgotten Expenses
The best area to start is overall cost. Buyers tend to forget about three common expenses:
- Repairs and renovations – The current owners can be asked to make specific repairs; otherwise, they can reduce the sale price to accommodate the buyer’s need to increase the mortgage amount so the repairs can be made. It isn’t unreasonable to increase the mortgage by up to 15 percent to make repairs and perform renovations.
- Furnishing the home – When moving from an apartment to a home or from a small home to a larger one, more furnishings may be needed. It isn’t unreasonable for a new homebuyer to take a while to completely furnish a home. However, it may be better to do it sooner rather than later. If the furnishings are tied into the mortgage, they are a part of the mortgage for the life of the loan.
- Life insurance – Owning a home means that there is something to leave to dependents. Taking out a life insurance policy that has a provision for paying off the home mortgage can ensure that the designated dependents inherit the home. Of course, there are other ways to protect the home, but this is one simple way.
The Buying Process
Homebuyers forget about some other elements. The first is the home inspection. The home inspection reveals a lot about a home. The lender can use this information to decide whether to lend on a home. This means the greatest fixer upper could be found, but the bank may not agree unless the terms are favorable for them.
Another element of the home-buying process is knowing the crime rate of the neighborhood. The crime rate can affect the cost of homeowner’s insurance. If the crime rate is high, insurance is going to cost more. If it is low, insurance is going to cost less. This should be looked into before settling on a specific home.
Overall, the best thing to do is ask lots of questions to avoid forgetting anything during the process. If an answer produces another question, don’t be afraid to ask. A homebuyer has the right to know everything from various costs to the long-term impact of owning the home.
By Bradley J. Rich
Real Estate Analyst in Portland, OR