Buying Your First Home : Part 3

Finding a Suitable and Affordable Home

In this third installment of our Buying Your First Home series, you'll learn you'll learn about finding a suitable and affordable home — and some tips on evaluating those you find. If you have any questions at all, feel free to call or email me.

 

Buying Your First Home


1: Pre-Approval vs. Pre-Qualification
2: Costs of Home Ownership
3: Finding a Suitable & Affordable Home
4: The Agreement to Purchase
5: Closing your Mortgage Loan
6: Before & After Moving Day
7: Home Buyer's Inspection Checklist
    (Free download)

 

Finding a Suitable and Affordable Home

The Neighborhood

If you want to be entirely satisfied with your new home, ask yourself the following questions:

  • Is the house suitably located for schools, churches, shopping facilities, transportation and your place of work?
  • Is the neighborhood well-maintained and are the other houses similar in type and price range to the one you wish to buy?
  • Are emergency facilities close by, such as police, fire, hospitals, etc?
  • Is the house located so that you won't be bothered by noise and danger from highways and other streets with heavy traffic?
  • Does the area have local zoning laws or deed restrictions which will protect the neighborhood?

The Lot

In addition to the general location and neighborhood, you should make sure you are going to be satisfied with the size and shape of your lot, and with the existing or proposed lawn, shrubbery, walks, driveway, garage. etc. If any additional work on the lot is to be done, make sure that the purchase agreement lists all such improvements which the builder or seller will make as part of the purchase price, if any. If you want to add rooms, have play space for the children, a pool, garden or other exterior amenity, make sure that sufficient space is available.

Is the land properly graded to prevent standing water and soil saturation while maintaining convenient access to the lot area? If it is an existing house, take careful notice of the slope of the ground around the house. If possible, it should slope away from the home so that water will be carried away from the foundation. If possible, check the lot after a heavy rain to see whether it drains properly.

If you are building a house on land you are purchasing separately or already own, consider how far away the utilities are and the cost of hookup. If service from a public or community water and sewage system is not available, find out if the ground water and subsoil conditions are satisfactory for an individual well and sewage disposal system.

The House

The criteria you use to determine the quality of the home you wish to buy depends on a number of factors: age, location, type of home, the reputation of the builder, how well the home has been maintained, etc.

In general, there are a couple important guidelines to follow when purchasing a home:

  • If you're buying an older, "pre-owned" home, have a reputable and experienced home inspection service company conduct a thorough inspection of the property prior to purchasing. In most cases, it is the buyer's responsibility to pay for and obtain this inspection, but it is well worth the expense, even if you're familiar with other homes in the area. Securing a satisfactory report from a private home inspection firm should be a contingency of yours (as the Buyer) in the purchase agreement of the house. Beware of any seller or real estate agent who tries to pressure you into purchasing the home without an inspection.

  • If you're purchasing a new home, particularly a "tract home" in a subdivision of similar homes, investigate the builder. Contact the Better Business Bureau and Consumer Affairs offices in your region to see if there are complaints on file regarding the builder. You can also search the Internet for information about builders, particularly the larger, well-known firms. In particular, you should be looking not only for negative information, but positive commentary as well. If you're purchasing a home in a "Phase" other than the first (such as Phase 2, 3 or 4) in a particular subdivision, consider talking to several residents in the already completed sections regarding their overall satisfaction with the quality of construction and service of the builder. Document any problem issues, particularly those that owners may have in common. For example, if two out of every four new homeowners claims to have had electrical problems, be sure to find out what type of problems and how well the builder responded to correcting the situation. Don't be afraid to present findings of problems to the builder, and do so in advance. Let the on-site supervisor know about your concerns and ask what, if anything has been done to ensure that you won't experience the same problems. Remember, too, that you can employ the services of a home inspection service company during construction of a new home to verify the quality of workmanship and materials, although you will bear the cost for such an inspection.

  • If you're having a home custom built to your specifications, be sure that the builder you employ can provide references to other satisfied customers, and call those people to confirm the quality and service of the builder. Oftentimes, a custom-build contractor merely oversees and supervises the construction of homes and the subcontractors contracted to perform various services. Don't be afraid to obtain references for subcontractors as well.

If you're buying a house with a FHA loan, a FHA-approved appraiser will appraise the property to establish its reasonable value, which is an estimate of the current market value. Both you and your loan broker will be notified of the reasonable value. If you are building a home or buying a newly completed home with FHA financing, HUD/FHA will usually inspect the property during construction. 

But remember that the Federal Housing Authority cannot guarantee you that the house is properly constructed in all respects, nor can it guarantee that you will be satisfied with the house in every way. The responsibility of the FHA is limited under the law. FHA is guaranteeing your loan, but it cannot  guarantee your house.

As you look over the house, your primary job is to make sure that the house meets the needs of your family. This printable checklist can assist you in looking over the main features of a house that you're considering. The following pointers are also provided to help you to know what to look for:

Floors Utility Outlets Closets Insulation
Doors Windows Kitchen Other Storage
Ceilings & Walls Bathrooms Heating & A/C Roof

Floors

You should examine the floors carefully to see that they are level and without serious surface defects. If it is a wood floor, take careful note to see that the joints are tight and that it has been properly sanded and finished. Small knots in the flooring do not necessarily mean that it is of poor quality, but they should be tight knots to be acceptable.

Wood flooring comes in a number of types. The two major types are square blocks (known as "parquet flooring"), and flooring that is in strips of various lengths (known as "strip flooring"). A good way to determine if the floor is well laid and tight is to walk over it slowly to make sure that there are no places where there is noticeable depression under foot. If so, that part of the floor should be corrected.

Some new houses today may have concrete floors covered with asphalt tile or wood flooring. When asphalt tile is used, you should be able to tell whether the flooring is well-laid and tight. It is important that the joints be smooth.

Kitchen floors may be either linoleum or asphalt tile, and the bathroom floors will usually be either linoleum, asphalt tile, or ceramic tile. You should inspect these floors to see that the material has been well-laid. In some rare cases, bathrooms may be carpeted. Make sure the condition of the carpeting in a bathroom is the same, and not worse than any other area. Moisture, mold or mildew can adversely affect carpeting when used in bathrooms.

The asphalt tile or linoleum should be properly fitted around the corners and fixtures. If there are cracked or chipped pieces, you should require that these be corrected, because water may get down in these places and work its way under the material and loosen it.

Doors

Open and close all exterior doors a few times to see that they fit well. Large gaps can cause drafts in outside-facing doors, although some clearance around the door is necessary. Look at the finish of all exterior doors to make sure that they're painted or varnished so as to be protected against moisture. While examining these doors, also look at the threshold, which is the separate piece installed under the door and fastened to the floor. This threshold or bottom piece should be well-fitted to the bottom weather stripping to keep out wind and moisture. Check the existing locks for proper operation and adequate security.

Inspect all of the interior doors also. Make sure they all close and latch properly and are not warped out of shape. Be sure that locks on doors to children's rooms are keyed on the outside, and not lockable only from the inside of the door which could represent a safety hazard in case of fire or emergency.

Ceilings and Walls

Inspect the walls and inner ceilings for cracking or staining which could indicate a leaky roof. Regardless of the wall material (brick, plaster or drywall), the walls should be smooth and even both vertically and horizontally. 

If you're buying an old home, keep in mind that most of the paint used in structures built in 1950 or earlier contained significant amounts of lead. Lead-based paint has been determined to be a health hazard to children who might eat chips from the paint. Before you decide to buy any older house which has cracking, peeling, scaling or loose paint, you should know if the house has been repainted with non-lead-based paint. If not, insist that the paint is removed and replaced or that an adjustment is made in the purchase price to offset the cost for replacement.

You should also know that asbestos was used in wall materials in some homes built between 1945 and 1978. You should determine if asbestos-based products are in your home before purchasing, and what, if any, remedial construction is necessary to replace this material if replacement is necessary.

Utility & Electrical Outlets

While looking at the walls, take time to note the utility outlets, their locations, and if there are enough of them to meet your needs. Make sure that the cabling is actually in place behind blank face plates for utilities. Light switches should be placed so they're reachable when you open the doors. Make sure you have sufficient power circuits to run whatever appliances or equipment your family intends to use. Remember that many older houses were not originally wired to accommodate electricity, cable television or telephones in every room, as is common today.

Tip! If your home is just being built, consider whether you would like to have a computer network in your home. For example, many families can save money by sharing an Internet connection between computers rather than having multiple ISP accounts. If you'd like to have your home "network wired", talk to the builder (or builder's electrical subcontractor) about installing network cabling (CAT-5) at the same time other wiring is being installed. In most cases, the added cost is very reasonable and the feature can be considered an upgrade. The same principle can be applied to other wiring needs, such as a whole-house audio system.

Windows

Be sure there are enough windows to give proper light and ventilation. Try opening and closing all windows to see that they operate properly and that they close tightly to keep out the weather.

Security bars on windows should always have a working quick-release mechanism accessible from the inside of the house in case of fire or emergency. You should seriously consider removing or replacing security bars which are permanently bolted to the window frame.

If you find the windows in a new house do not close tightly, ask the builder to correct them before you move in. If you find the windows painted shut, be sure to have the builder free them because if you try to do so you might damage the window or chip the paint, and you may have to pay the replacement cost.

Does your contract provide for screens? If not, keep in mind that you may wish to add them later. The same applies to storm windows and storm doors.

Bathrooms

Bathrooms should be conveniently located. Inspect the bathrooms to see that fixtures are installed and are functionally well-placed.

Examine the location of the wall switch for the light in the bathroom. Be sure that this switch is located so that you cannot reach it while standing in the bathtub. If you can reach the switch easily from the tub, require the builder to move it, because you or your children can get a severe or even fatal shock by standing in a tub of water and turning on a switch.

The lower part of some bathroom walls may be covered with ceramic tile, plastic tile, or some other waterproof material to protect the wall against splashing. Inspect the tile and bathtub for proper installation and look for signs of chipping which may lead to an expensive repair job later.

Closets

Check on the number, size and location of closets. Do they meet the needs of your family? Make sure there is sufficient room for storage and that there is no evidence of mold or mildew in the walls or flooring.

Kitchen

When you buy your home, certain equipment for the kitchen and laundry may be included in the purchase price. Be sure that any appliances and fixtures included in the sale price of the home are written into the purchase agreement. Examine the equipment to make sure that you have received the the agreed upon make, model and capacity of included appliances or their price-equivalent substitutions. For example, do not accept a second-rate range or refrigerator when you were offered a top-of-the-line model. Your sales contract should specify the type and size of kitchen and laundry equipment to be included in the purchase price. The same goes for the water heater, heating unit, and air conditioning unit if you're buying a new house.

Heating & Air Conditioning

The main concern for heating and air conditioning equipment is that the particular units have the proper capacity for comfort and yet remain economical to operate.

Besides testing the units themselves during your inspection of the home, it's best to consult with a professional heating and air conditioning supplier or service professional to determine if the units installed are sufficient in capacity to perform well. This holds true for both new and old homes. Also remember that in areas with hard water, water heaters need to be flushed and/or decalcified periodically. Find out from the previous owner if proper maintenance has been performed on the water heater.

Tip! If you're buying a pre-owned home, consider purchasing additional insurance which covers the repair cost and/or replacement of high-dollar items such as air conditioners, water heaters, major appliances, etc. Most insurers offering basic homeowner's policies have some form of extended coverage. These plans usually carry a nominal additional cost, but have very reasonable deductibles. Cover the most important and expensive items, including your electrical and plumbing systems. If you're purchasing a newer home, be sure you verify any warrantees on existing equipment before committing to purchase.

Insulation

If insulation is specified, check on the insulation in the attic and also see that you have open louvers (ventilators) in the attic. A louver is a slatted opening with screen wire on the inside that provides circulation of air, summer and winter. It is very important that these attic vents or louvers be left open throughout the year. Occasionally, homeowners cover up the vent opening to conserve heat or keep out wind-driven rain or snow. Openings should never be left closed up for more than a very brief time, such as during a severe storm period. Closing up this ventilation area can produce excessive condensation, and the resulting moisture may cause rapid deterioration of parts of the roof, walls, or ceiling.

There are a number of types of insulation which are satisfactory. Foil, fill, slab, or board types of insulation installed between, over, or under framing members will be effective when properly used. If you have a flat roof, the method of installation will be different from that for sloped roofs. The important consideration is proper use of the particular type specified.

In basement-less houses with crawl spaces, foundation vent openings are for the same purpose of providing air circulation. It is important also that these foundation vents be left open the year round except for very brief periods of severe storm. Where a heavy, treated ground-cover paper or roofing has been laid over the entire surface in the crawl space, the need for foundation ventilation is reduced. However, in all cases some ventilation is important, not only to prevent excessive condensation and deterioration of floor construction but also to maintain safety. A tightly enclosed crawl space where gas-fired heating systems and/or sewer pipes are located without proper ventilation could cause accumulation of explosive gas pockets and represent a substantial danger to your family. 

Other Storage

Check to make sure the home has ample storage space. In houses with no basement, storage may be found in attic space, utility rooms or the garage. Be sure that the garage is large enough to park vehicles and that the garage door is in workable condition.

Roof

Check the condition of the roofing material. If you're purchasing a pre-owned home, find out if and when the roof was last replaced. Inspect the inside ceilings for discolored staining which could be an indication of a leaking roof. A good home inspection service person will usually carefully examine the condition of the roof as part of a complete inspection.

Additional Notes About "Old" Houses

If you buy an "old" home, you should be absolutely sure the house is in sound condition. If you find some defects in an old house which the seller agrees to correct, be sure to get a written agreement specifying what the seller will do before you obligate yourself to buy.

The time and expense of getting expert advice is well worthwhile - you don't want to buy a house with termites, a leaky roof, a poor foundation, poor lot drainage, a faulty sewage disposal system, an inadequate water supply system, or defective floors, walls, or ceilings, without knowing exactly what you're getting into. Extensive repairs to correct such defects may be very expensive.

Finally ...

If you have any doubts about the condition of the house you are buying, it's in your best interest to seek expert advice before you legally commit yourself in a purchase agreement, particularly with a previously occupied home. Most sellers and their real estate agents are willing to permit you, at your expense, to arrange for an inspection by a qualified residential inspection service. Also, most sellers and agents are willing to negotiate with you concerning what repairs, if any, are to be included in the purchase agreement. Steps of this kind can prevent many problems, disagreements and disappointments later.

As always, feel free to call or email me with any questions you may have. 

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