Recently one of my clients asked if I had a check-list for buying a home.  My answer was ‘no’, but what a great idea!

Purchasing a home is exciting, especially your first one; yet it is also a bit overwhelming. Like anything else, though, you need to think through the ‘cost’ of owning your own home.

As a financial coach, my first priority is to assure that the budget is working and good financial planning is in place. Having lived through home-buying mistakes, I desire to help others be wise in making a new home purchase so that the new home is a blessing.

There is so much pride in home ownership. For many, it is a dream come true. It is where you live your life – in a place that is yours. You get to make it ALL yours – your tastes, your place, your home. So make wise decisions, use caution and enjoy the adventure.

So, here is my suggested checklists:

• Do this before you look.

  • Have your finances in order. Every month, plan your spending before the month begins, and FOLLOW the plan.
  • Have a savings account of 3-6 months living expenses. Living expenses include house payment + all utilities and insurance, food, transportation (car payment, gas, insurance, general maintenance) and minimal clothing.
  • On top of your 3-6 month living expenses, have a down payment ready of 10 – 20% of the cost of your new home. The higher the down payment the less your monthly payment. Less than 20% usually requires private mortgage insurance.
    • Hint: to help prepare for a future house payment, begin saving the anticipated amount.
  • Know what you can realistically afford. Since the housing crash, lenders have been more cautious with loan amounts – which is good for the consumer. Realistically, your house payment should be within 20-25%  of your take-home pay.  For example, if your take-home pay is $3000, your house payment (including insurance and taxes) should be no more than $750.00.
  • Know what you want. Simple, yet not. To determine what you really want and/or need, ask yourself these questions:
    • How many bedrooms do you need? want?
    • How many bathrooms?
    • Do you want a large or small yard? flower gardens? room for vegetable garden?
    • Is a view important?
    • Do you want an eating space in the kitchen, or do you want a separate dining area or both?
    • Do you need a place for a family to grow? Rooms tend to get smaller with more people and grown people!
    • Do you have the skill-set to do minor repairs and/or remodeling? a home that has good structure, yet needs remodeling can be a bargain
    • AND, do you have the time, energy, and money to create the home you want? Can you wait six months to one year to make it yours?
  • Determine the type of neighborhood. Young families, professionals, mix? schools, parks, recreation, city amenities, etc.
  • Get pre-qualified for a home loan. Knowing the price range guides your search. This also means you need a qualified loan professional to assist you with understanding types of loans, pros/cons of each type, and which one is best for you.

• Do this when looking for and finding a real estate agent.

  • Find two-three agents that work in your desired neighborhood. Check out their track record for selling homes. Read reviews. Check out their website.
  • Interview the two-three chosen agents. Ask questions and interact with them. Here are a few questions to get you started:
    • What is your usual turn-around time from locating a home to close?
    • How many years of experience do you have? (a newbie can be a good choice if they have had good training and are surrounded by good mentors, support and company)
    • Do you help with find loans? or make recommendations?
    • How do you help us find the right house?
    • What if we don’t like any of the houses you show us?
    • IMPORTANT: take note of how they interact with you. Are they a good listener, as well ask you questions? A good real estate agent will want to get to know you and how to best meet your needs.
    • When answering your questions, can they explain in a way you understand? This is so important, as the process can get complicated. You need to be able to know and understand the process.

• Do this when looking for your house. 

  • Remember it is easy to ‘fall in love’ with a house. Take your first check list with you – what you want in a house.
  • Be realistic.  Do you have the resources (time, money, energy) to do a lot of fix-up work? If it is a new home, think about paint, landscaping, window treatments, etc.
  • Check out the quality of the carpet and other floor coverings. Will it need to be replaced soon? Was a quality product installed?
  • Pay attention to odors. If freshly painted, it may be covering up smells from smoke, animals etc. (Yes this happened to us. A fresh coat of paint covered the nicotine that began dripping down the walls within two months of moving in.)
  • Look past the ugly decorating. You might have a gem. But be realistic 🙂
  • Pay attention to the neighborhood. Drive through it at night, in the middle of the day. Is it dark? loud? peaceful? friendly?
  • Pay attention to room space. Homes staged for showing, strategically place furniture to make rooms appear larger. What about the floor plan – does it work for you? Imagine yourself coming home from work, bringing in the groceries, entertaining – doing your daily activities.

Reality is that you don’t really know the true ‘cost’ of time, energy, fun, frustration, contentment of owning a home until you are settled, regularly paying the mortgage, and dealing with home emergencies – like calling the plumber in the middle of the night! Owning a home is a good financial decision if you are well prepared.

There is an adventure ahead of you – enjoy it. Dream. Let your well-selected agent guide you. Have confidence in your decision. Enjoy.