Lesson #1: Decide location versus space before searching for a home
When first-time home-buyer Jarrod was shopping for his first place in Seattle, he faced a tough decision: Should he buy a small home in Fremont, his favorite area of the city, or should he buy a larger home for a lower price in North Seattle, about seven miles north? Jarrod wanted to spend some time weighing his options, but then another buyer made an offer on the North Seattle home he was considering. He needed to make a quick decision or face losing the home, so he decided to put in an offer. The sellers accepted, and Jarrod got the home. But almost a year later, he’s still not 100 percent sure he made the right choice. While he loves having plenty of space to entertain in his North Seattle home, he misses Fremont’s proximity to restaurants and nightlife. Before shopping for a home, it’s important to set your priorities and decide which is more important to you: space or location. If you settle on this in advance, you can make thought-out decisions during the home-buying process and avoid the unsettling feeling of buyer’s remorse.
Lesson #2: Don’t commit before you’re ready
Owning a home is a huge commitment — and a more expensive one than some home-buyers realize. Jarrod’s monthly housing expenses, for instance, have gone from about $1,300 a month as a renter to $2,200 a month as a homeowner. Before buying a home, make sure you know exactly what you’re getting into so you can decide if you’re financially and personally ready for such a large commitment. In addition to your monthly mortgage payment, figure out how much you’ll be paying for property taxes, homeowner’s insurance, HOA fees and other monthly costs of owning a home.
Lesson #3: Sweat equity can save thousands
First-time home-buyers John and Jennifer always knew they wanted to add value to the first home they owned. So when they bought their first place in Belfair, they immediately started remodeling, and they decided to tackle many of their home improvement projects themselves. The couple spent $20,000 remodeling their kitchen, building a new deck and installing a new patio — upgrades that would have cost $50,000 by their estimation if they had hired a contractor to do the job. If you have the skills, the time and the patience to live with dust and debris for a while, do-it-yourself home improvement projects can save you a big chunk of cash.
Lesson #4: A down payment is never a bad investment
John and Jennifer originally planned to put around $60,000 down on their first home. However, they changed their minds just before closing when they qualified for a loan that didn’t require any money down. The home-buyers opted for 100 percent financing and invested their down payment money in the stock market. After losing about half of that money, they regret not putting it into their home instead. Putting some money down is a good idea for any home-buyer because it minimizes your risk and lets you start off with some equity.
Lesson #5: The school district will affect home value
Even if you don’t have kids, it pays to check out a neighborhood’s school district before buying a home, as living in an area with a sought-after school system raises your property value. John and Jennifer’s home, for instance, is in one of the best school districts in Washington, and their neighborhood typically does well in resale.
Lesson #6: A land survey will answer boundary questions
Before making changes to your property, it’s a good idea to find out your exact property lines. A month after they moved into their home, John and Jennifer had their land surveyed and discovered that their yard ended 8 to 10 feet closer to their home than the previous owner told them, leaving them confused as to where to build their fence. You can’t always rely on the seller’s knowledge of the property, so getting a land survey will clear up any uncertainties you have.
Lesson #7: Check building plans for the neighborhood
Shortly after John and Jennifer moved into their home, they learned that a large playground was going to be built in the community — right next door to them. Since the homeowners have no children, they get to hear the squeaky sound of swings all day, but they don’t benefit from having a playground so close by. Plus, having a playground practically in the backyard is hit or miss when it comes to resale — buyers with kids may see it as a selling point, while others may not. Before buying a home, find out if there are any building plans near your home to avoid surprises after you’ve moved in.