MORE THAN A MORTGAGE
by Diane St. James © Copyright 2004
One of the first things that comes to mind when someone mentions
a new house, is a mortgage. What kind of rate will you get?
When can you lock in? How long will it take to get approved?
What is the reason for all of these questions? We get excited,
we get hopeful, and want to think more about this house
we are going to buy as being our haven, the place we may raise
children, or grow old in.
Often when I consult with people about their mortgage possibilities,
one of the first questions is how much do they qualify for? While
I can certainly help them with this, I hope that they have thought
about some important things about buying a home.
1. SIZE OF HOME
When you are looking to buy a house, besides getting a look
at your current credit report history, you need to get a good idea
of what you are looking for. Do you want 3 bedrooms, at least
one and a half baths, and a garage?
Perhaps you are already in a home that is just too big now
that all the children are grown and gone. You may want to
buy a smaller home with perhaps 2 bedrooms and no basement
for less to maintain.
Where do you want to live?
In the city close to work, or in the suburbs, not so close. Maybe
you want to live in the country more than an hour from work so that
by the time you get home, you've talked yourself through all the
frustrations of the day? I myself used to commute just over an
hour one way and I took that time to and from work to sing my
heart out. I loved the singing but still hated the commute.
When you are thinking about the location, think about closeness
to shops, schools, hospitals, airports, you know...things that are
important. Where the closest pizza parlor is, is a biggie for me!
2. STYLE OF HOME
What about the type of house? There are so many types
and I urge people to go to "Open Houses" as early as a year
before they think they may be buying a home. Start grabbing
those Homes magazines at the grocery store--I still take them
now and then, and my husband gives me a "Why are you picking
that up?" look. I guess I have a habit of seeing what's out there.
By doing this, you can decide if you like one style of home
versus another. Think about your needs and what home is
the best for you? Some people like ranch homes so they don't
have to climb stairs all the time. Some prefer a home that is
attached to others on both sides so there are neighbors nearby.
Buying a condo means paying a homeowners association fee
in exchange for not having to maintain any of the grounds,
parking lot, or any amenities the project may have.
There are also the PUDs or Planned Unit Developments that
often are single family home communities but may have some
amenities such as playgrounds and/or pool for the community
member's use who pay a homeowners association fee. You
usually have to maintain your own property grounds including
shoveling in the winter though.
Maybe you have an elderly parent and would like to buy a 2 unit
dwelling, or a home with an in-law suite. Maybe you want to be a
homeowner and landlord at the same time and buy a 2-4 unit
property and rent the other units out (keeping the biggest one
for you of course).
3. MUST HAVES
Other things to consider are whether you want a big or small yard,
sidewalk, garage, basement, or even some extra amenities like an
in ground pool. Just remember the more extras and bigger yard,
the more maintenance and expense.
Perhaps you want a laundry room on the second floor as
opposed to the basement, or a bathroom adjoining the master
bedroom for privacy and convenience. The master bathroom
feature can be really nice and once you've had one it is hard to
go back to using the family bathroom in the hallway.
4. NEW OR USED?
Do you want to build a home? If you do, be prepared for some
of the biggest challenges (and fights) with all the choices and
decisions you have to face! Also be prepared to tack on at least
10% to the base sales price you started with for the extras and
upgrades that you will undoubtedly want.
There are many nice older homes as well that can be from
20 to 100 years old that were quality built
and may even have been updated in certain areas.
Maybe you want a fixer upper instead,
which could be an even bigger challenge...beware the
'needs TLC' (tender loving care) in the home descriptions. This
undoubtedly means doing some costly repairs or replacements
in order to make the home decent.
This should give you a good idea about some important tips about
home buying that don't involve involving the mortgage aspect.
This way, when you are ready to seriously put a bid in for a home,
you are better prepared. If you just can't afford to get the home
that you'd really like, you can always buy a smaller starter home
and work your way up. There is always the option to wait too, as
long as you have the capacity to save money in your current
situation. I know some who wait until the car loan is paid off and
visa bills are down to a manageable level. Then there is more
money freed up to get the home they want. There I go...talking
about the financial end of things again.
Happy house hunting!
Diane St. James is a mortgage professional with over 23 years
experience. Her website http://www.abcmortgage.net exists to help
educate people about the mortgage world. She is the author of 2
e-books, and has been quoted in the WALL STREET JOURNAL,
appeared on national cable new television CNBC, and was featured on
a Cover Story for USA