Best Practices for Buying a House?

Here’s what I think I know about buying a house:

  1. Get a home inspector to check the place out first before you do anything, to avoid ending up in a money pit.
    1. I don’t know how you get/find a good home inspector, or how much they cost.
  2. Don’t get a variable rate mortgage. Only use a fixed rate mortgage.
  3. If you can no longer make payments, make sure to contact the bank and re-negotiate the payments before they foreclose on you.
    1. I’m not really sure what this entails, and I don’t really know how to know if you can trust a bank in the first place.
    2. From what I understand banks do not act like landlords very often, because if they sell a house that is foreclosed on they lose money on it, and if they foreclose often the humans that were dwelling within tend to retaliate against the house they are going to lose, so that the bank loses even more money.

Beyond that I really don’t know much other than any repairs that need to be made to a house have to be paid for by YOU and that in the end you’ll have maybe $200 in your bank account even if you are working thanks to repairs payment and upkeep. Also, property taxes should be looked at, and various things that your neighbors do can lower the property value of your house.

I’m horrified at the thought of buying a house. Are there any other best practices?

One thought on “Best Practices for Buying a House?

  1. D Stanley

    I’m tempted to call this “too broad” but there’s plenty of realtors here that can give good advice, so I’ll add my two cents (assuming the context is the US):

    I don’t know how you get/find a good home inspector, or how much they cost.

    A good realtor will take care of these concerns (inspection, appraisal, title work, etc.) for you.

    Don’t get a variable rate mortgage. Only use a fixed rate mortgage.

    Yes – this takes interest rate risk off of you at the cost of a slightly higher initial rate (but no risk that the rate will ever increase)

    If you can no longer make payments, make sure to contact the bank and re-negotiate the payments before they foreclose on you.

    I’m not sure if this works in practice. If you think there is a decent risk that you will not be able to make your mortgage payments (e.g. because it’s a large part of your budget and job security is an issue) then you may not be in a position to buy a house.

    Other things that I can think of:

    • Don’t buy the biggest house in a neighborhood
    • Put at least 20% down to avoid PMI (and lower your monthly payment)
    • Don’t assume that the value will increase – meaning, don’t think of the house as an investment. The purpose is to give you a place to live, not to make you more wealthy.
    • Shop around for mortgages – don’t rely on your realtor to suggest a bank or broker.
    • When shopping for mortgages, pay attention to closing costs. The lowest interest rate is not always the best deal – some will include “points” or additional costs that increase the overall cost of the mortgage.

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