Mortgage rates are at all-time lows in Indianapolis and home prices remain very reasonable as well. This combination, plus rising rents, is pushing renters in Central Indiana toward first-time homeownership.
Buying your first home can (and should) be exciting! But you should also do your research to make sure that you ask the proper questions of the process, and make the best choices for yourself and your household.
Here are 6 recommended questions for first-time buyers to ask home sellers, your Realtor and yourself:
How much home can I afford?
This is listed first as it’s the most important first step in buying your first home. Getting pre-approved for a mortgage will not only give you an idea of what price range you feel comfortable with, but will also let you know what (if anything) needs to be cleared up on your credit before being approved. There are several documents, tax returns, and pay stubs that you’ll need to gather in order to get the all clear from the lender. The last thing you and your agent wants is to find the perfect home, then discover you aren’t able to get financing for it. Many sellers and nearly all distressed sellers (foreclosures, etc.) require a pre-approval letter with all offers. So be prepared! Check out our home affordability calculator to get a quick idea of how much house you can afford.
What major repairs have been made to the home?
Although standard disclosure forms are supposed to provide information regarding past damage and updates to the property, there are occasionally repairs that are omitted or otherwise forgotten. Be proactive and ask pointed questions about the home, especially the high-dollar items such as the roof, foundation, furnace, a/c and the electrical systems. Some home issue have a way of resurfacing many years later and it’s best to know in advance.
Which school district is this home in?
As a first-time buyer, you may or may not have school-aged children. However, in many areas and in Marion County especially, public school rankings can positively (or negatively) affect home values. Even if you don’t have little ones, consider resale down the road. Ask your real estate agent for school district data. Consider asking the seller for feedback, too.
Are there HOA or condo fees?
The costs of home owners’ association & condo association fees should definitely be considered when looking at properties. For single family detached homes, HOA dues can range from $90-500+ per year. Condo dues are generally more, as they provide more for the homeowner, such as exterior maintenance, lawn care etc. These dues can range from $50-500+ per month. These figures aren’t generally figured into your pre-approved amount, so keep these numbers in mind when looking at both property types.
Is this a “distressed” property, and what does that mean to me?
For many home buyers, the allure of a foreclosed home or a home in short sale can be huge. Prices are generally discounted as compared to similar real estate — sometimes by as much as 20%. However, most distressed properties are sold in “as-is” condition, with little or no room for negotiation on needed repairs. This means that homes may have defects which could cost unanticipated repair money or, if substantial enough, disqualify the property for financing options. Ask your real estate agent for help with distressed homes and their suitability to your home buying needs. With the proper due diligence, REO’s (bank-owned homes) and short-sales (pre-foreclosures) can be a great investment.
What does _______ mean?
This isn’t as much a question, as a fill in the blank for anything you don’t fully understand. The bottom line for this final tip, is to educate yourself and ask questions along the way. Being a first time buyer is an exciting time, and should be treated as such. But its also a great time to learn the process of home-buying and about the real estate market in general. The more you educate yourself by reading websites, books, real estate blogs (ah hem…this one is a good place to start!), the better off you’ll be. Knowing the right questions to ask is as important as knowing the right answers.
After asking the above questions, it’s important to remember that buying a home can be an emotional decision; and one that requires using your “brain” as much as your “heart”. Try to keep emotions in check so that you don’t overpay for a home or over-extend yourself.