5 Factors to Consider Before Buying a House

Buying a home is an exciting milestone in your life. You've been dreaming for years about the number of bedrooms, how you'll remodel the kitchen, and the size of the yard. You have a great realtor, and there are many houses in your price range. After touring a few, you find one you love, make an offer, and it's accepted! Now the real work begins.

There are many steps between your accepted offer and settlement. As the buyer, you can always back out before settlement if something makes you nervous. You might lose a bit of money depending on the point in the process, but it's essential to be sure about such a large purchase. Here are five factors to consider before you sign on the dotted line.

1. Inspection Findings

A standard step in the home buying process is an inspection. While it is possible to waive the inspection, it's best to spend the money to have an inspection done. The seller will provide a disclosure, but because people aren't always honest, may not know the answer, or forget an important detail, an inspection will give you peace of mind that you have the most up-to-date information about the property you plan to purchase. 

After the inspection, you'll get a report. Read it carefully. Most inspectors break their findings into categories: "needs immediate attention," "important," and "could be better but can wait." In the "needs immediate attention" category, decide which things you would be willing to handle on your own and which items you would like to negotiate with the seller. Be ready to have deal-breakers now to avoid getting in over your head later.

2. Appraisal Value

A qualified house appraisal is different from an inspection. An appraisal gives you an assessment of the home's worth based on the current market. The appraisal matters because it helps you know if you're getting a fair price. An appraisal that comes in under the sale price can also mean that you need to come up with more cash to close the gap between what your mortgage company is lending you and the agreed-upon sale price. If the gap is too great, you can walk away from the sale and save your money for a better deal.

3. Environmental Threats

When you move to a new house in a familiar area, you likely know all there is to know about the weather patterns. However, if you are moving to a new area, it's important to learn as much as you can about the environmental threats you could contend with. If a central part of your child's new school curriculum involves hurricanes lesson plans, you can be sure that hurricanes are a real threat in this area, and you'll need to consider that when purchasing a home. You'll want to know about flooding, special insurance coverage, and the premium on that coverage you would need to carry to protect your home and belongings.

4. Local Taxes

Another critical factor that could break a sale is the amount of local taxes. If you're moving into a highly rated school district or to an area with much higher home values, you can anticipate that the taxes will be fairly high. You can use an online tool to estimate your local taxes or ask your realtor or mortgage lender. Taxes factor into your monthly mortgage payment, so knowing what to expect before you buy can help you decide what you can afford.

5. Location, Location, Location

While the area immediately around your new home is part of what drew you to it, make a point of objectively assessing your new stomping grounds before settlement. Talk to the neighbors, drive to the schools, assess walkability and parking, and decide if the area has all of your preferred amenities. You don't want to realize after settlement that the nearest grocery store is 45 minutes away by car, and you don't have a car.

Buying a new house is exciting, but the price tag is worth objectively assessing all of the variables that will make your new house feel like home.