Whether a first-time home buyer or a seasoned professional, buying a new home can feel challenging. Between all the moving parts and today’s fluctuating market, the process can happen quickly. Ensure the process goes smoothly by knowing what questions you should ask when buying a house.
To make your decision easier, we’ve compiled a list of the most important questions to ask when buying a house.
When you decide to buy a home, ask yourself some crucial questions. Thinking about your current financial situation and long-term housing goals can help you select the best house for your needs. Ask yourself the following questions when buying a home:
To keep your finances secure, start with a strict range of how much you can afford. Many investment advisors suggest most people can afford a house 2.5 times more than their annual gross income. That number may be lower if you have significant debt or other financial obligations. When browsing the market, only seek out houses in your price range.
Remember the costs outside of the sales price, such as:
Many aspiring homeowners start saving months in advance for their down payment. To start saving, make a monthly expenses budget and examine where to cut costs. Put the money you save toward a down payment, other future house costs or extra savings, just in case.
Everyone enters the housing market with different preferences and circumstances. Whether you have a large family or need a home for one person, these circumstances affect your buying decisions.
Consider these house aspects as you search for your new home:
After you decide to purchase a house, you still have to pay closing costs, which cover the processing of paperwork, an appraisal, loan origination fees, third-party fees for title research and other administrative fees. Typically a house’s closing cost is about 2%-5% of its purchase price. Both parties should reach an agreement on who pays these fees.
Working with a good agent can provide multiple benefits throughout the process. Not all real estate agents will be right for you. Before choosing, there are some important questions for a real estate agent that can help you determine if they’re the right person to help you buy or sell a home.
A comparative market analysis (CMA), often known as “the comps,” is a list of homes for sale or recently sold in a neighborhood. If you sell your home, the CMA will give you a good idea of the home’s worth by comparing it with the other properties around. When ready to purchase a home, CMAs can provide an overview of your area’s real estate activity and an accurate idea of how much you can expect to spend to get your ideal home.
Part of a real estate agent’s job involves knowing the area where they operate. They can and should provide their clients with valuable information about property values in their interest areas.
A good agent often has extensive knowledge about the area’s trends and property values to give their clients accurate information about growth or decline, nearby services and amenities. Sometimes, an agent can provide information about future projections related to local infrastructure that may impact future property values.
If you sell a house while looking for a new one, you will want to ask about marketing. In some regions, properties fly off the market as soon as they hit the multiple listing service (MLS), a system real estate agents use to input information and announce available homes to other agents.
The MLS populates many online home search websites. While this may offer enough home marketing in some areas, many times, an agent needs to do more to attract potential buyers to a home by placing local newspaper ads, using social media or holding an open house.
Most real estate agents charge a commission, a percentage of whatever your home sells for, for their services. Before working with an agent, ask what commission rate they charge. The seller often pays the buyer’s agent’s fees at closing.
When choosing a real estate agent to list your home, you’ll sign an agreement determining how long they will list it and what they will earn in commission when it sells. If you back out of that agreement before its expiration date, your agent may charge an early termination fee.
Whether buying or selling a home, expect to spend a lot of time communicating with your real estate agent. Talk to them upfront about how frequently you can expect to hear from them:
Look for an agent who provides thoughtful, honest feedback about your home’s problem areas. Nuisance factors can range from minor annoyances to serious safety risks. You might be willing to deal with a neighbor’s noisy dog for the sake of living in your dream home, but living in an area close to registered sex offenders is normally a point you wouldn’t compromise on.
A trustworthy agent will point out the home’s problems.
When you find a home you’re seriously interested in, you should communicate with the seller as much as possible. Ask the seller as many questions as you need, including:
Verify what the sale includes early on in the buying process. While anything inside is usually considered part of the house, extra fixtures or structures might not be. For example, a shed outside or sound systems might not be part of the sale. Make sure to clarify the sale’s terms before completing the process.
Ask the seller about the roof and other house structures’ ages to plan for future maintenance. Depending on the roof’s material, you should replace it every few decades. Asking the sellers about the fixtures’ ages can help you create a maintenance timeline, affect your purchasing decision and give your another question to ask the inspector during their investigation.
Also ask the sellers if they’ve recently renovated or experienced any trouble with important fixtures, such as the foundation, insulation, kitchen appliances or the HVAC system.
From job relocation to remarriage, people move houses for many reasons. By learning why the current owners are leaving, you can gauge their enjoyment of the house and find new negotiation options. For example, if a seller needs to sell the house quickly, they might accept a lower offer than the initial one.
If certain substances are present in a house, your family could face major health issues when living in that environment.
These are the main house hazards you should inquire about:
After the sellers accept your offer, the home you’ve chosen has to undergo a home inspection. Many contracts offer a contingency that allows you to negotiate the price down or even back out of a sale if the home inspection reveals problems you didn’t notice before.
Since buyers are responsible for choosing the home inspector, you’ll want to ask a few questions to ensure you hire an experienced and ethical inspector. Don’t overlook this critical item on your “Buying a New Home” checklist. The best questions for home inspectors include:
Buyers and their real estate agents hire a home inspector to look closely at the chosen home. According to the National Association of Home Inspectors, an inspector is required to go through a list of 1,600 items in every home they inspect, including the:
While no inspector is an expert in each of these areas, they can identify places that may require additional attention and recommend the next steps to the buyers to address problems before closing.
A home inspection relies on what the inspector sees. They cannot pull back flooring or make holes in the wall to see what’s underneath or behind something. If they see evidence of a problem, such as a wet patch on the ceiling or the smell of mold in a bathroom, they can recommend that the buyer hire a plumber to inspect more thoroughly.
Home inspections cost $300-$500, depending on where the house’s location and size. The condition of the house can also impact the price because older homes typically take more time and attention. Asking about costs prior to the inspection ensures you won’t have any surprises on inspection day.
The home buyer needs to be present during the home inspection. During this time, the inspector may take time to explain valuable insights about home processes and the potential pitfalls they find. This information will allow you to make informed decisions as you move forward with the purchase, especially if you renegotiate the sale price or ask the seller to make repairs before closing.
Watching the inspector do their job and asking questions along the way can provide valuable information for when you move in.
Once the home inspector completes their inspection and written report, it’s time to discuss the details. Carefully review their findings and ask questions, especially about anything you don’t understand. If they’ve said something that concerns you, ask them to clarify.
If communicating via phone and the inspector significantly expands on what they included in their report, ask them to amend their report or email their additional comments so you have them in writing for later. Whatever you do, don’t ignore something you don’t understand. Ignoring a problem could potentially cost you significantly.
Home inspectors are not experts in all areas of home repair and maintenance. Their job involves alerting you to potential problems and advising you on your options. If the inspector suspects a problem with the HVAC or plumbing, ask them if they recommend you hire an expert to take a closer look at the problem. Remember, you’re paying them to ensure you move into a comfortable, safe home. Be bold and ask what they think should be done to identify or correct a potential problem.
A home inspection will provide a detailed list of the condition of your home, but a home inspector’s overall impressions can provide equal value. Take the time to ask them what they thought about the house and identify the top concerns.
Use this information to guide conversations with your agent and identify negotiations or repairs needed before closing.
When buying a new home, especially as a first-time home buyer, you’ll probably have many questions to ask about the financial side of the process and negotiating a reasonable rate for your budget. Some of the questions you should ask include:
A lender will look at your income, debt, credit history and current employment status to determine how much you can afford to spend on a home.
This process — known as preapproval — can save you a lot of time and stress once you start looking for houses because it helps you narrow your search to the houses you can afford. First-time homebuyers and military veterans may also qualify for additional programs that assist with purchasing a home. Ask your lender about these so they can offer you the loan products that best suit your needs.
It’s common to ask for a down payment of 20% on a home, but some mortgages, such as the VA Loan for veterans and active-duty service members, waive this requirement. Other loan products may allow you to put down less than 20% with certain conditions. Talk to your lender about what programs you qualify for and what kind of down payment you can expect to pay for a home.
Interest rates constantly change. When you first inquire with a lender, they may quote you with a direct interest rate and an annual percentage rate (APR). The first rate is the basic interest rate applied to your final mortgage amount. The APR includes fees associated with the lender.
Use this information to shop around with lenders and get the best rate possible. Also, make sure you know whether the offered rate is fixed or variable. A fixed rate will remain the same for the entire life span of the loan. A variable rate can change and may result in you paying more later.
Lenders use a points system to allow homebuyers to pay money in exchange for a lower interest rate. Ask the lender how many points your initial quote included and to show you a cost comparison if you purchase additional points. Increasing or decreasing the points you pay for with the home’s purchase may offer several benefits.
Since interest rates vary, your lender will give you a deadline for locking in a specific interest rate depending on the type of mortgage you’re purchasing and the terms of your loan. Ensure you know your deadline and what you need to know about locking in a rate to get the best deal possible.
After preapproval, your lender can calculate your estimated closing costs based on the average of what other people spend. Once you’ve ratified a contract, the lender track of all the costs associated with preparing for closing, such as:
The lender can update you on the estimated closing costs as you go through the process so you don’t exceed your budget.
Your lender will provide a closing disclosure that breaks down all the final costs and fees associated with purchasing your home. If preapproved, you can compare this document to the loan estimate to understand how things may have changed. Legally, you must receive the final closing disclosure three days before closing so you can review all final costs and fees.
When preparing to close on your new home, you’ll need to choose a reputable and reliable insurance provider. Before selecting a provider, discuss the best options with your insurance agent. Some of the most important questions to ask insurance agents include:
Most homeowners insurance policies will include coverage for:
Standard home insurance policies provide some level of protection for exterior and interior damage, as well as injury liability protection.
A good policy should also include some rental coverage if you need to move out of your home for repairs at some point. Keep in mind that most standard homeowners insurance policies don’t cover:
While many policies include windstorms and hail, they don’t normally cover floods and earthquakes. If the house you’re looking at is located in a federally designated, high-risk flood zone — which you can check using FEMA’s Flood Map Service — you will need to supplement your regular homeowners insurance with flood insurance. If you’re unfamiliar with the area, talk with your real estate agent or insurance agent to determine whether you need additional coverage to protect your investment.
Because your agents live and work in the Union and St. Clair area, they have valuable information about the region’s conditions and identify the necessary coverage to protect your home. Ask them what they recommend, especially if the area is new to you.
Certain features, such as a security system, may qualify you for a discount on your homeowners insurance policy. Check with your agent to see what you qualify for.
Since buying a home is one of the biggest investments you’ll make, asking questions and getting the right information will help you make wise decisions. At David Pope Insurance, we’re committed to helping our clients navigate the home-buying process by offering many homeowners policies to protect your investment and give you peace of mind.
