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Buying a new home is understandably a major step to take, and it is not a step to take lightly. Your new home purchase can affect everything from your budget and financial future to your lifestyle, your future plans, and more. It is wise to review a few critical factors before you move forward with your plans to buy a home. By understanding and analyzing these points carefully, you may feel more comfortable with your home buying plans.

Review Your Debt Ratio

If you plan to apply for a home mortgage to pay for your new home purchase, you should review your debt ratio carefully. When you buy a home with a loan, your lender will analyze your debt ratio to qualify you for the loan amount you desire to buy a home. The debt ratio includes all of your monthly debts, such as your minimum credit card payments, the new monthly mortgage payment, your car loan payments, student loan payments and other similar expenses. It does not take into account your utilities, child care expenses, food, gas for your car, insurance and more. Divide your monthly debts by your gross monthly income to determine your debt ratio. Ideally, this figure should be below 43 percent to qualify for a loan to buy a home.

However, this 43 percent figure does not actually tell you if your new mortgage payment will be affordable for your budget. Therefore, you should analyze your budget on your own to determine if you can afford to buy a home without negatively affecting your current lifestyle.

Understand the Costs of Buying a Home

You also need to ensure that you have enough cash reserves before you buy a home. There are some home loans that require a very low down payment. However, it is better to place at least five to ten percent down on a home to have some built-in equity established. You should also estimate the closing costs before you buy a home. Closing costs can be estimated at three to five percent of the sales price or more. Your lender may also want you to prove that you have at least two to three months of the mortgage payment in your bank account after the down payment and closing costs have been accounted for. You should not plan to entirely drain your bank account of funds when you buy a home.

Examine Home Maintenance Expenses

Some buyers purchase a fixer-upper. These are homes that require a significant amount of work right from the start, and you may need to pay several thousand dollars or more to simply make the home livable or to improve it to a reasonable or good condition. In addition, all homes have maintenance expenses that you need to budget and plan for. Small expenses, such as light bulbs and air filters, can add up. However, broken appliances, plumbing issues roof damage and more can be more expensive, and these issues often develop out of the blue. You should be aware of the current condition of a home before you buy it. You also need to know the age of structural components, such as the roof, before you buy a house. If you do not have the funds available to properly maintain a home, you may consider delaying your purchase until you can afford to care for it.

Think About the Future

Some people buy a house with the expectation that they will sell it within a year or two. For example, you may be aware that you may be transferred to a new location within your company soon. Perhaps you plan to start a family and will need more space in a few years. It is possible to sell your home at any time. However, there are costs associated with selling a home, such as real estate agent commissions, make-ready expenses and more. You may not have sufficient equity in the home if you sell it soon after you purchase it, and this means that you may not be able to sell it as you had planned. In addition, it can sometimes take several months or longer to sell a home. Therefore, you should plan to purchase a home that has a suitable size for your needs for the next few years. If you plan to move within a year or two, renting may be a better option to consider than buying a new home.

Estimate the Impact on Your Schedule

Before you buy a home, you also should think about how the real estate purchase will affect your weekly schedule. For example, home ownership generally requires at least some time and effort to properly maintain the property. You may be accustomed to calling your landlord when something breaks in the home, and the landlord may currently handle exterior property maintenance and all landscaping work. As a homeowner, however, you will need to schedule repair work for the home and make yourself available at a moment’s notice to be at home when the repair team arrives. You also will need to handle exterior maintenance work on the home, or you will need to budget properly so that a professional can be contracted to do the work for you. A new home may also be larger than your current home, and it may require more time to clean each week.

As you can see, there are many factors to consider before you buy a home in Corpus Christi. Keller Williams, our goal is to help each of our valued clients make a great real estate decision. If you are not certain if home buying is right for you, a smart idea is to consult with our team. Through a personal consultation, you can learn more about the impact of home ownership on your budget and your life so that you can determine if now is the right time for you to buy a home.

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45-Point DIY Home Inspection

General 

Windows: Check that they open and close easily. Any broken panes?

Doors: Check that they open and close completely. Do they stick? Lock? Scrape the floor at any point?

Floors: Any creaking? Obvious unevenness? Place a marble on the floor and see if it rolls to check for a slant. (Do the marble test in multiple locations in the house.) 

Trim: Any damage or missing pieces? Animals can be brutal to wood trim, and matching old trim is almost impossible.

Lights: Turn on every light switch to make sure they work. (Note: If the home is unoccupied and the power is turned off, this won’t be possible.) 

Stairs: Walk up and down the stairs and touch every spindle on the railing. Do they seem sturdy or wobbly? Do the stairs creak? Are any parts missing? 

Outlets: Get a voltage tester at your local big box home improvement store for less than $20 and test every single outlet. 

Furnace: Look at the furnace. Are there any stickers that indicate installation date? 

Water Heater: Check for water around the base of the water heater. Any stickers on this to indicate installation date

Kitchen

Cabinets/Drawers: Open every cabinet and drawer, then close again. Do they move smoothly? Does anything prevent any of the doors or drawers from easy use?

Oven: Open and inspect the oven. Does the door open slowly, indicating the springs still work? What is the condition of the oven? Turn on the oven to make sure it works.

Stove: Turn on each burner on the stove. If gas, turn on and turn off before turning the next one on to make sure they all turn on by themselves, rather than catching the flame from an adjacent burner. If they all work individually, turn them all on to make sure they all work at the same time. If electric, just turn them all on.

Fridge: Open the refrigerator/freezer doors. Do they open easily? Note: Do NOT do this if the home is vacant and appears to have been vacant for some time. Trust me on this one. Assume it must be replaced.

Dishwasher: Open and inspect the dishwasher. Do the springs work on the dishwasher door?

Faucet: Run the water in the sink. How is the pressure?

Cabinet Interiors: Take a good look at the cabinets. Is there adequate storage? Do you have enough drawers? (I once bought a condo that had one drawer in the kitchen. Sigh.)

Microwave: Open up the microwave and take a peek inside. Turn it on to see if it works — but don’t let it run for very long. That’s not good.

Hood: Turn on the range hood fan and light to make sure they work. Peek underneath to check for filth — this is a commonly overlooked area for cleaning.

Stone Countertops: Look at the stone countertop and check for chips and cracks.

Formica Countertops: Check the Formica countertop for chips.

Tile: Check the floor for cracked tiles.

Windows: Open and close all windows.

Bathrooms

Plumbing/Drainage: Flush the toilet. Fill up the sink and tub and then let the water run out to test for backups or poorly performing drains. Check for leaks from all faucets.

Flooring: Any broken tiles?

Toilet: Does it rock or is it solidly on the floor?

Tub: Any cracks or chips?

Vanity: Check the condition. Make sure to open it up and check the inside, too.

Ventilation: Does the fan work? Is there a window? Does it open and close easily?

Bedrooms

Closets: Do closets have doors? Do they open and close easily?

Windows: Open and close all windows.

Flooring: Check the state of the flooring — does carpet have stains, wear spots, etc? Is the hardwood scratched and damaged?

Living/Dining/Family Room

Doors: Any doors? Do they open and close easily?

Flooring: What is the state of the flooring?

Walls: Are there any holes or other damage in the walls?

Windows: Do the windows work? Are they vinyl, wood, aluminum?

Basement

Odor: What does it smell like? An overpowering odor can be mold or mildew.

Walls: Do the walls have any cracks? Small, hairline cracks are not so concerning, but large cracks — especially horizontal cracks — can be an indicator of bigger foundation problems.

Exterior

Sprinkler: Turn on the sprinkler system.

Lights: Turn them on.

Outlets: Test them.

Fence: Walk the fence to check for loose boards and the overall sturdiness of the fence.

Siding: What is the condition of the siding?

Roof: Go to the South side of the house and look at the shingles. The Southside gets the most sun, and curling or buckling can be an indication that the roof needs work.

Garage Door: Does the garage door(s) open and close easily?

Lawn: What does the grass look like?

Yard: Are there any dead trees?

Remember! This Is Just A Good First Step...

This list is just a starting point for you to look deeper into the home. It isn’t meant to be a substitute for a professional home inspection performed by a licensed inspector — but it’s a great way to really see a house. Sometimes the beauty (or ugliness) of a home can make you overlook items you aren’t excited about repairing.

Use this checklist to determine your offer price, as well as your level of interest in the property. You won’t find everything that an inspector will, but you also can save the cost of an inspection fee if you discover a deal breaker on your own.

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8 steps to buying your home

1. Decide to buy.

Although there are many good reasons for you to buy a home, wealth building ranks among the top of the list. We call home ownership the best “accidental investment” most people ever make. But, we believe when it is done right, home ownership becomes an “intentional investment” that lays the foundation for a life of financial security and personal choice. There are solid financial reasons to support your decision to buy a home, and, among these, equity buildup, value appreciation, and tax benefits stand out.

Base your decision to buy on facts, not fears.

If you are paying rent, you very likely can afford to buy

There is never a wrong time to buy the right home. All you need to do in the short run is find a good buy and make sure you have the financial ability to hold it for the long run

The lack of a substantial down payment doesn't prevent you from making your first home purchase

A less-than-perfect credit score won't necessarily stop you from buying a home

The best way to get closer to buying your ultimate dream home is to buy your first home now

Buying a home doesn't have to be complicated - there are many professionals who will help you along the way

2. Hire your agent.

The typical real estate transaction involves at least two dozen separate individuals-insurance assessors, mortgage brokers and underwriters, inspectors, appraisers, escrow officers, buyer's agents, seller's agents, bankers, title researchers, and a number of other individuals whose actions and decisions have to be orchestrated in order to perform in harmony and get a home sale closed. It is the responsibility of your real estate agent to expertly coordinate all the professionals involved in your home purchase and to act as the advocate for you and your interests throughout.

Seven main roles of your real estate agent

A Buyer's Real Estate Agent:

Educates you about your market.

Analyzes your wants and needs.

Guides you to homes that fit your criteria.

Coordinates the work of other needed professionals.

Negotiates on your behalf.

Checks and double-checks paperwork and deadlines.

Solves any problems that may arise.

Eight important questions to ask your agent

Qualifications are important. However, finding a solid, professional agent means getting beyond the resume, and into what makes an agent effective. Use the following questions as your starting point in hiring your licensed, professional real estate agent:

Why did you become a real estate agent?

Why should I work with you?

What do you do better than other real estate agents?

What process will you use to help me find the right home for my particular wants and needs?

What are the most common things that go wrong in a transaction and how would you handle them?

What are some mistakes that you think people make when buying their first home?

What other professionals do you suggest we work with and what are their credentials?

Can you provide me with references or testimonials from past clients?

3. Secure financing.

While you may find the thought of home ownership thrilling, the thought of taking on a mortgage may be downright chilling. Many first-time buyers start out confused about the process or nervous about making such a large financial commitment.

From start to finish, you will follow a six-step, easy-to-understand process to securing the financing for your first home.

Six steps to Financing a Home

Choose a loan officer (or mortgage specialist).

Make a loan application and get preapproved.

Determine what you want to pay and select a loan option.

Submit to the lender an accepted purchase offer contract.

Get an appraisal and title commitment.

Obtain funding at closing.

4. Find your home.

You may think that shopping for homes starts with jumping in the car and driving all over town. And it's true that hopping in the car to go look is probably the most exciting part of the home-buying process. However, driving around is fun for only so long if weeks go by without finding what you're looking for, the fun can fade pretty fast. That's why we say that looking for your home begins with carefully assessing your values, wants, and needs, both for the short and long terms.

Questions to ask yourself

What do I want my home to be close to?

How much space do I need and why?

Which is more critical: location or size?

Would I be interested in a fixer-upper?

How important is home value appreciation?

Is neighborhood stability and priority?

Would I be interested in a condo?

Would I be interested in new home construction?

What features and amenities do I want? Which do I really need?

5. Make an offer.

When searching for your dream home, you were just that a dreamer. Now that you're writing an offer, you need to be a businessperson. You need to approach this process with a cool head and a realistic perspective of your market. The three basic components of an offer are price, terms, and contingencies (or “conditions” in Canada).

Price-the right price to offer must fairly reflect the true market value of the home you want to buy. Your agent's market research will guide this decision.

Terms-the other financial and timing factors that will be included in the offer.

Terms fall under six basic categories in a real estate offer:

Schedule-a schedule of events that has to happen before closing.

Conveyances-the items that stay with the house when the sellers leave.

Commission-the real estate commission or fee, for both the agent who works with the seller and the agents who work with the buyer.

Closing costs-it's standard for buyers to pay their closing costs, but if you want to roll the costs into the loan, you need to write that into the contract.

Home warranty-this covers repairs or replacement of appliances and major systems. You may ask the seller to pay for this.

Earnest money this protects the sellers from the possibility of your unexpectedly pulling of the deal and makes a statement about the seriousness of your offer.

6. Perform due diligence.

Unlike most major purchases, once you buy a home, you can't return it if something breaks or doesn't quite work like it's supposed to. That's why home owner's insurance and property inspections are so important.

A home owner's insurance policy protects you in two ways:

Against loss or damage to the property itself

liability in case someone sustains an injury while on your property

The property inspection should expose the secret issues a home might hide so you know exactly what you're getting into before you sign your closing papers.

Your major concern is structural damage.

Don't sweat the small stuff. Things that are easily fixed can be overlooked.

If you have a big problem show up in your inspection report, you should bring in a specialist. If the worst-case scenario turns out to be true, you might want to walk away from the purchase.

7. Close.

The final stage of the home buying process is the lender's confirmation of the home's worth and legal status, and your continued credit-worthiness. This entails a survey, appraisal, title search, and a final check of your credit and finance. Your agent will keep you posted on how each if progressing, but your work is pretty much done.

You just have a few preclosing responsibilities:

Stay in control of your finances.

Return all phone calls and paperwork promptly.

Communicate with your agent at least once a week.

Several days before closing, confirm with your agent that all your documentation is in place and in order.

Obtain certified funds for closing.

Conduct a final walk-through.

On closing day, with the guidance of a settlement agent and your agent, you'll sign documents that do the following:

Finalize your mortgage.

Pay the seller.

Pay your closing costs.

Transfer the title from the seller to you.

Make arrangements to legally record the transaction as a public record.

As long as you have clear expectations and follow directions, closing should be a momentous conclusion to your home-searching process and commencement of your home-owning experience.

8. Protect your investment.

Throughout the course of your home-buying experience, you've probably spent a lot of time with your real estate agent and you've gotten to know each other fairly well. There's no reason to throw all that trust and rapport out the window just because the deal has closed. In fact, your agent wants you to keep in touch.

Even after you close on your house, you agent can still help you:

Handle your first tax return as a home owner.

Find contractors to help with home maintenance or remodeling.

Help your friends find homes.

Keep track of your home's current market value.

Attention to you home's maintenance needs is essential to protecting the long-term value of your investment.

Home maintenance falls into two categories:

Keeping it clean: Perform routine maintenance on your home's systems, depending on their age and style.

Keeping an eye on it: Watch for signs of leaks, damage, and wear. Fixing small problems early can save you big money later.