Things to Keep in Mind When Buying a House

My wife and I have bought three houses since we were married 9 years ago, and with each, we've learned a little more about the process. Here are some things we've learned that you should keep in mind.

PAY ATTENTION TO THE NEIGHBORHOOD

If you have a realtor, they will ideally be showing you houses in areas where you want to look. But even within some towns and regions that are considered desirable, there can be neighborhoods in decline. Even if the houses are nice or newer, take a look at neighbor's yards. Are there junked cars? Are there several cars? Is the grass cut? Are the hedges trimmed? Are there signs that the exteriors of the homes aren't being maintained? Look for neighbors. Talk to a few if possible to get a feel for what the neighborhood is like.

DON'T BELIEVE THE DISCLOSURES

Our first two houses had previous owners. On both, the owners had indicated that the homes had no plumbing problems. In both, we had major plumbing issues. We know that one purposely lied on their disclosure because our home warranty company indicated they'd been to the house during the time the previous owners lived there.

BUY THE HOME WARRANTY

Yes, everyone recommends against these things, but our Home Warranty caught several issues with our second house and more than paid for itself. You may never use it, but it also can take care of items that the previous owner had managed to temporarily fixed.

DON'T OVER BUY FOR THE NEIGHBORHOOD

If you're buying the biggest house with the most land, most rooms, and largest garage in the neighborhood, don't expect to get a premium for these features. Even if your home is clearly the best in the neighborhood, when it comes time to sell, you may have a tough time commanding much of a premium over other houses in the neighborhood. No matter how much difference there is, your house will look overpriced for the neighborhood unless you keep it within the range of others in the area.

GET A HOME INSPECTION

This is the most important purchase you'll make. You need a home inspection for piece of mind. Don't use a friend, relative, or coworker. Don't pick up the phone book and pick the person with the best ad, either. Hire a home inspector that is part of the American Society of Home Inspectors. Members of this organization have been through rigorous certification, and are trained to find legitimate issues and make recommendations to the buyer about improvements that could be made to the house. A non-ASHI inspector made recommendations to someone buying our house that were not legitimate and cost us money to prove otherwise.

DON'T GET A GIMMICK LOAN

If the housing crisis has proven anything, it is that home loans that allowed people to buy a lot of house for only a little bit of money were a BAD idea. Unless you will not be keeping your house, you know you can afford a rate increase, AND you can handle a potential drop in the value of your house when it comes time to sell, I would not recommend an interest only loan. Ideally you should get a fixed rate loan OR a variable rate loan that you know you can comfortably refinance when interest rates get lower. Lock in payments you can afford not only now, but in the future.

BEWARE WHEN BUYING IN SINGLE BUILDER NEIGHBORHOODS

Several companies are building new neighborhoods completely by themselves. If you're buying from a reputable local company with an established record of building quality homes, you probably will be okay. But realize that all of the houses going up around you will be built at the same time, by the same people with the same few sets of plans. If the homes are not well made or of dated design, the entire neighborhood will have issues down the line.

Also, friends who have bought homes from these mass builders have often been nickeled and dimed to death. They tend to build a base home and then allow you to upgrade throughout the home. The base items are often cheaper items of lower quality that will break within a few years. A coworker who bought a home from one of these places had to have her kitchen faucet and furnace replaced and had issues with her floor and drywall during that time.

And don't assume a new home doesn't need an inspection. It does! Our inspector pointed out about 20 issues that could have created huge issues for us.

IF YOUR GUT TELLS YOU NOT TO, TRUST IT

If something doesn't feel right about the house or the transaction of buying the house, there probably truly is something wrong. This is the biggest purchase you'll ever make, and it is important to feel good about it.