As you prepare to buy your first home, it’s likely that you have already spent significant time researching the home-buying process. Fiscally, you’re ready. You have money set aside for the down payment and closing costs. You’re pre-approved for your mortgage. Your monthly budget is ready to go, and a stellar real estate agent is in your corner. Now you just need to find that dream home.
Tips Before Making an Offer
Buying a house can quickly turn into an emotional decision. You find a home that would be perfect for raising your young family – schools are close by, and your commute to work is only 10 minutes away. However, before you fall in love with the home and the excitement builds, you still have work to do.
Despite all your preparations, there are still some aspects of buying a home that are commonly overlooked. Unchecked, these areas could knock your budget off track or even decrease your future property value. Before you make an offer on your dream home, review the following four areas that first-time homebuyers often miss.
It’s no secret that you’ll have to pay property taxes on your new home. However, what catches people off guard is how much they will be paying.
While property tax laws will vary by state, when purchasing a home, the estimated property taxes are typically based on the current home’s last tax bill. The problem with this is that many states reassess property values a year after the sale. What does this mean to you?
- Example: Most states have restrictions on how much property taxes can increase each year (e.g., 3% annually). If the previous homeowner lived in the home for 10+ years, their property taxes might be much lower than other homes in the area.
After buying a home, the city, county, or state will likely reassess your home’s value to current market values – possibly causing your property tax bill to jump.
What catches most homebuyers off guard is that the reassessment takes place the following year after the sale. Your mortgage company will typically inform you that your escrow account is underfunded and your monthly payments are going up. Not a fun surprise!
What to Do: Before you make an offer on a house, identify other homes (similar in size and features) in the area that recently sold within a year or two. Look up their current property taxes for a more realistic number.
Homeowner’s Association (HOA)
Many communities today have a homeowner’s association or HOA. The goal of the HOA is to maintain a safe, pleasant, and clean environment for all residents within the community. However, to do this, they have rules and restrictions in place. For example, you may be limited on what colors you can paint your home or even what type of dog you can own.
What to Do: Thoroughly review the HOA rules before purchasing a home within the community. You don’t want to find out later that your plans (such as putting in a pool, shed, or parking a trailer on your property) are not permitted. Or worse, that your beloved pet isn’t welcome in the community.
A property easement is when you own a piece of property, and another person or organization legally has the right to use your land for specific purposes.
Some easements can prevent you from making future upgrades to your property. For example, you may have a utility or drainage easement on your property that prevents you from putting in that new pool you want.
What to Do: Before buying a property, thoroughly review the property survey. If you’re unsure what to look for, ask your realtor or the HOA for help. They should be able to help you identify any easements that may be on your property.
Imagine you recently purchased a new home because of its open landscape and great views. Then one morning, you wake up to find construction vehicles clearing the nearby land. You soon learn they plan to build an apartment complex that will completely obstruct your view – and bring more traffic.
What to Do: Always ask about future construction before buying a home. Even if you didn’t buy a home for the views, future construction could impact traffic, school zones, and more. It can also determine your home’s future property value. For example, a gas station might lower your home’s future value, while a school or hospital could raise it.
Before deciding to buy, ask your realtor or the HOA if there are any future construction projects in the area. If the land nearby is undeveloped, inquire who owns the property and their future plans. You’ll at least be able to determine if the land is zoned as commercial or residential.
We’re Here to Help!
While the home-buying process can be tedious, finding that perfect home will be a dream come true. Our home loan team is here to guide you through the entire process – answering your questions and alleviating any hiccups along the way.
If you’re ready to begin exploring your home financing options, we’re here to help. Please contact us or stop by any of our convenient branch locations to discover which home loan is right for you.
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Each individual’s financial situation is unique and readers are encouraged to contact United Texas Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.