Ten Things Every New Homebuyer Needs to Know

By HGTV | Published: 10/04/2007

Homebuying can be a confusing and somewhat daunting task. We'll help you understand the homebuying process and find the home that's the perfect fit!

1. Know your needs.

First, examine your lifestyle. Do you long for bucolic pasturelands? Feel energized by urban cityscapes? Looking forward to a family-friendly suburban lifestyle? It's important to think of the limitations each locale places on your lifestyle and the perks each has to offer -- before making the commitment to buy.

Suburban lifestyles are flexible, offering children the opportunity to play outdoors and enjoy a neighborhood environment. Urban areas offer greater social, culture, educational and career opportunities. Rural environs offer privacy, room to roam and the ability to pursue hobbies -- such as gardening -- on a larger scale.

In addition to locale, it's important to think about the type of dwelling you're considering. Will you quickly outgrow that handsome city brownstone? Is a country cottage the perfect size? Will purchasing a condo allow you to forego lawn and home maintenance and enjoy more leisure time?

2. Weigh the costs of homeownership.

There's more to consider than just a monthly mortgage payment. Will you be able to afford the expenses that come with owning a home? Utilities, property taxes, repairs, homeowners association fees, lawn maintenance (unless you will do the work yourself) can all add up.

If you're moving to a new part of town or a new city, it's important to consider the cost of living for that area. Transportation, school tuition and everyday living expenses can also make homeownership more expensive than it initially appears.

3. Better to build or buy?

Having a home custom-built to your specifications can be expensive. But are you ready to take on remodeling and updating an older home to meet your needs?

A remodel can often be expensive and in the end, is less satisfying, and finishing a project yourself, without experience, can result in the purchase of costly tools and the loss of your valuable time. Do your research before signing with a contractor or deciding to revamp an older home.

4. Location, location, location.

A bargain is never really a bargain when located in a bad neighborhood. Sometimes lightning will strike and gentrification of certain areas will result in skyrocketing property value -- but that's rare. It's better to take a chance on a smaller home -- or one in need of repair -- in a great area where the value will only rise.

5. Know your loans.

A loan rate can look great in an advertisement, but once bankers have drawn you in to the branch office, what will you really pay? Points, PMI (private mortgage insurance) and closing costs can drive your mortgage cost up.

Some programs allow buyers to have smaller down payments. But how long are you required to stay in the home without penalty? And how much more will you pay each month?

Be sure to read all the clauses and fine print before getting a mortgage. And don't be afraid to shop around for the best rate.

NEXT: Five More Things to Know When Buying Your First Home >>

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