Undergoing a house hunt for a first time, or even upgrading your present home, leaves you with quite a few things to consider. The eagerness to redecorate a new abode and a lack of basic financial literacy when it comes to mortgages and home buying, however, can cloud your judgment and present problems down the line.
The National Association of Realtors (NAR) released its 2011 Profile of Home Buyers and Sellers, and found that buyers of newly purchased homes expected to live at the residence for 15 years, a considerably longer period compared to previous years, according to the report.
With the growing trend to stay in homes long-term, it's becoming increasingly imperative to take appropriate measures to seek out a home that meets your current and future needs.
Top 4 Things to Consider When Buying a House
In addition to typical home-buying concerns, like finding the best mortgage rates and improving your credit score, there are a few considerations that new home buyers erroneously neglect when researching homes. These factors may not always have immediate implications, but can create challenges with home ownership in the future:
1. Traditional Neighborhood Development (TND)
Let's say you've scoped out your first-choice home and find the property, including its surrounding neighborhood, to be exactly what you've wanted. While the home may align with your aesthetics now, communities change over long periods of time. Traditional neighborhood development projects may include positive changes that affect your home value (e.g. a recreational park, school, etc.), but they can also bring about unwanted changes to your surroundings.
Aesthetic changes like a highway overpass directly behind your property or a new railway system one mile away that can be heard in the late hours may be a necessary feature in the city, but can cause dramatic influence over home values.
To avoid this financial loss, home buyers can turn to the city's urban development department to review upcoming plans for community improvements and existing zoning regulations.
2. Remodeling Restrictions
Inexperienced buyers can overlook potential red-tape on remodeling projects on a home. If your current household does not include any children, but growing your family is a serious possibility within the next five years, for example, you will want to investigate any limitations set upon your property by a community association.
Restrictions can range from minor exterior changes, such as the home's paint color, to larger impediments, like limitations on outbuildings (e.g. a guest house) or garages. These stipulations can make it difficult to expand your home to accommodate an expanding family unit.
3. Neighborhood Amenities
Exploring neighborhood amenities such as schools, public transportation, recreational parks, and proximity to entertainment are additional things to consider when buying a house.
While some of these may not seem outwardly important at first, they contribute to heightened housing market values in the community and affect whether you're satisfied with your home purchase. According to the NAR, about 50 percent of buyers found that the "convenience to work was the second most significant factor" when considering home locations. However, variations arose based on the buyer type (e.g. single women, married couples with and without children, etc.), thus prioritizing specific amenities over others.
Choosing the right kind of amenities for your present and future plans can impact future savings in terms of convenience and commuting costs, especially if the prospective neighborhood is lacking in that facet.
4. Crime Rates
Before moving into a new community, many Americans recognize the importance of low crime rates, as it affects their personal safety. What some do not consider, however, is the impact that cities with high crime rates have on monthly budgets.
Even if your home does not fall victim to a burglary or if you never experience an actual personal property theft, simply living in a high-risk neighborhood can send monthly bills upward, like inflated auto insurance premiums.
The 2011 Profile of Home Buyers and Sellers report did find that affordability of homes was of great importance to 45 percent of surveyors, but balancing that affordability against the crime rates in the area is a necessary measure to ensure that you're not fueling a dangerous investment.
Stay Informed to Find Your Dream Home
Keeping abreast of the intricate details and considerations of buying a home can make or break your home buying experience. Are you fully informed? Do your homework and take the financial literacy quiz to test your knowledge when it comes to making important choices regarding your money. Ultimately, having the patience to carefully weigh these considerations and improve your education surrounding mortgages helps to create peace of mind on this big-ticket purchase.
Jennifer Calonia writes for www.GoBankingRates.com, which provides readers informative personal finance and investing content, as well as the best interest rates on financial services nationwide.