Buying a home is a big deal and the home buying process can get overwhelming fast. You might choose to explore different types of home loans and weigh the options between a fixer upper house or a ready-to-move-in home.
So, how do you go about buying a home? We’ve put together a not-so-typical home buying checklist for starter homes, forever homes and everything in between to help you make a wise investment. We’ll encourage you to consider some hurdles to home ownership you may not be aware of. Plus, learn how home type, location and features can impact insurance coverage and costs.
Choose your property type and how you will use it
One mistake home buyers can make early in the buying process is not considering how home type and usage impacts loans and housing rules. Here are a few facts to consider:
- According to NextAdvisor, “duplexes will generally require at least 15% down, while three and four-unit properties will require a 20% down payment.” For single family homes, you may be able to put as little as 3% down with a conventional loan down payment. These big differences in down payment percentages may play a role in what types of homes are within your budget.
- Single family homes, townhomes and condominiums, also known as condos, may have a homeowners association (HOA). HOAs create and enforce rules for your property and the entire community within the HOA. These rules can dictate what behavior is acceptable in common areas, whether you can rent out your home, appearance rules, remodeling guidelines and more. Be sure to get familiar with all the HOA rules and requirements before you purchase a home.
- There are different types of mortgages for purchasing a home as a primary residence or investment property. If you originally buy a home as a primary residence and decide to rent it out down the road, you may commit mortgage fraud if your mortgage lender is not aware of the rental. Most mortgage lenders expect you to live in the primary residence you purchase for at least 12 months before converting it into a rental property. To avoid mortgage fraud, explore the rules and limitations of your loan and work with your mortgage lender to fill out the appropriate application for renting out the home you plan to buy.
As you can see, there’s so much more to the home buying process than finding a home you love and securing the finances to buy it.
Here’s a tip for first-time home buyers: While you’re considering different types of properties, factor in the loan options, loan rules, homeowner association rules (where applicable) and rules for renting out the property to make the best choice for your needs. Be sure to think about what you need out of a home right now and your goals for your house in the future.
Get familiar with what home inspectors will and will not check
This is one of the most important steps in any home buying checklist. Home inspectors play a crucial role in identifying damage or hazards in a home. A good home inspector is very thorough and checks HVAC systems, windows, basement walls and floors, crawl spaces, duct work and much more. However, they do not check everything. According to Realtor.com, these are six common areas home inspectors will not check:
- Septic tanks and well water systems
- Swimming pools
- Electrical outlets covered by heavy furniture
- Chimney or fireplace
- Earth beneath your home
It’s important to hire a home inspector who is thorough and takes time to answer your questions. Be sure to talk about what your home inspector can’t check well so you can take the proper steps to hire additional inspectors for your pool, roof or fireplace, etc. as needed.
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Decide how much work you’re willing to put into the home
Everyone has a different idea of how much remodeling they want to complete in a home. You may be looking to buy your starter home and the idea of expensive renovations seems daunting. Or you may be ready to buy a fixer upper home and transform it from top to bottom. Perhaps you want to buy a townhouse and make a few significant upgrades to add resale value when it’s time for you to move again.
Don’t gloss over this step in your home buying checklist because your total home buying budget should include money for repairs and renovations you wish to make right away. Consider the following options to help you decide your threshold for remodeling:
- Small cosmetic changes only like changing out light fixtures or faucets.
- New paint throughout the home and other small cosmetic changes.
- Remodeling a bathroom which may include fresh paint, a new vanity and new flooring.
- Renovating a kitchen with new cabinetry, countertops, appliances and a modern layout.
- Updates to several rooms such as a bathroom, laundry room and primary bedroom with en suite.
- Upgrading a fixer upper home with all new features and appliances throughout the home.
If you’re on the fence after reading that list, you may have an easier time deciding what you’re willing to do once you start house hunting. For your dream starter home, you might be willing to put in a little more elbow grease (or hire professionals) to make it exactly what you want.
Learn how different home locations, features and the age of the house impacts insurance
Home insurance is not a one size fits all type of coverage. Where you buy a home, entertainment features like pools and Jacuzzis, age of the home and age of home appliances can all impact insurance costs. Plus, some homes will come with unique insurance needs such as getting flood insurance coverage if you buy a home in a flood zone. Read more about home risks to consider before you buy.
If you are a first-time home buyer, these tips can help you navigate home insurance. Existing homeowners, learn about how you can better understand your insurance policy.
Talk to a Grange independent agent to learn more about different home factors that can impact the cost of home insurance and different add-ons you may need for full coverage.
Coverages described herein may not be available in all states. Please contact one of our local independent agents for complete details on coverages and discounts. If the policy coverage descriptions herein conflict with the language in the policy, the language in the policy applies. The material provided above is for informational, educational and/or suggestion purposes only, and does not imply coverage. WE RESERVE THE RIGHT TO REFUSE TO QUOTE ANY INDIVIDUAL PREMIUM RATE FOR THE INSURANCE HEREIN ADVERTISED. Applicable policies may be underwritten by Grange Insurance Company, Trustgard Insurance Company, Grange Indemnity Insurance Company, Grange Insurance Company of Michigan* and Grange Property & Casualty Insurance Company*, Integrity Insurance Company*, Integrity Property & Casualty Insurance Company*, Integrity Select Insurance Company*. *Not licensed in Pennsylvania