Phoenix homebuyers have a lot more than pricing to consider when purchasing a home; school districts, location, sun exposure and amenities to name just a few. Some homebuyers have “champagne taste on a beer budget” and after getting a consultation from a lender, buyers will often be surprised with how much they can actually afford. This is where the buyer needs to compromise their desires in order to meet their needs. This is not a simple process, but it can be made easy with some planning and a little thought. If you are buying a home in Phoenix, you need to give careful consideration to what is truly important in a home that you want make your own.
1. What do you really need?
First, examine your lifestyle. Do you long for country landscapes? Feel energized by urban cityscapes? Looking forward to a family-friendly suburban lifestyle? It’s more important to think of the limitations each locale might impose on your lifestyle more than the perks each has to offer — before making the commitment to buy.
2. How much is it to own day after day?
There’s more to consider than just your monthly mortgage payment. Will you be able to afford the expenses that come with owning a home? Utilities, property taxes, repairs, homeowner’s association fees, and routine maintenance can all add up.
3. New home or resale?
Having a home custom-built to your specifications can be awesome, but also very expensive. An older home has charm, but are you ready to take on remodeling projects to meet your needs?
A remodel can often be expensive and in the end less satisfying. Likewise, finishing a project yourself without experience can result in the purchase of costly tools and the loss of your valuable time. Be sure to do your research before signing with a contractor or deciding to revamp an older home.
4. The 3 rules of Phoenix real estate are: 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 an existing great neighborhood where the value will only rise.
5. Not all loans are created equal.
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 homebuyers to have smaller down payments. But how long are you required to stay in the home without penalty? How much more will you pay each month?
6. Do your due diligence!
Most states require that a home seller disclose potential problems with the property, but the homeowner may not always know or reveal existing structural problems (despite the legal requirement). The only way to truly know what’s going on inside a home’s structure is to secure the services of a reputable home inspector. You can expect to pay $300-$600 for the home inspection. It seems like a lot of money, but consider the thousands it could save you if there are major issues that you’re aware of before you purchase your home.
7. Everything must be in writing.
Perhaps one of the best ways to protect yourself is to have every part of the sale in writing and make sure you understand every aspect of the sale before making a commitment. Legal jargon and real estate terminology can be confusing, so hone your real estate vocabulary before house hunting. Don’t be afraid to ask your Phoenix real estate professional a lot of questions along the way. If things ever get dicey, feel free to consult an attorney.
8. Taxes, taxes, taxes…
Are your property taxes rolled into your monthly mortgage payment? Or will you be responsible for paying them yearly? Don’t forget to keep paperwork for your annual federal or state income tax return. You can often deduct the property taxes, points and interest paid on your mortgage. Set up a consultation with a tax accountant to learn more about the restrictions on these types of deductions.