Buying a new home is kind of a big deal. In fact, for most people, it’s the biggest deal. For most people, that first new home is the biggest purchase of their lives until then. So it’s only natural that you’ll have a ton of questions. You should have a lot of questions. After all, this extremely costly purchase comes with a lot of moving parts…not to mention a whole lot of additional expenses!
[Make sure you’re prepared for everything up ahead by familiarizing yourself with The Real Costs of Owning a Home.]
It is your responsibility, as the prospective homeowner, to do your due diligence before making your purchase. Find out everything you possibly can about the home and the neighborhood surrounding it before you make any commitments. After all, you don’t need any surprises once you’re in that new home.
Indeed, surprises can take the shape of leaky pipes, flooding basements, failing appliances, loud neighbors, invasive carpenter ants, and just about any other practical misfortune you can think of. As the old saying goes, that is the joy of home ownership. In other words, these surprises are rarely pleasant, and most of them can cost you a ton of time, money, and aggravation.
This is why it’s so important to ask as many key questions as you can beforehand. You’ll have questions that are best handled by experienced real estate agents, those that are best fielded by the seller, and those that might be better answered by the seller’s agent. The dynamic of each prospective purchase may be unique.
However, every home purchase has one thing in common–this is a huge deal and you deserve to know everything about this house, top to bottom, before you sign on the dotted line. So make sure you ask all the questions that are relevant to this investment.
Still trying to decide if you are ready to make the leap into home ownership? Before reading on, jump to our collection of valuable mortgage, refinancing, and affordability calculators. Otherwise, read on for a list of questions you should have the answers to before you pull the trigger on your new home.
50 Questions You Need to Ask Your Real Estate Agent Before Buying a House
Obviously, there are tons of questions you’ll need to ask before you get a full understanding of exactly what you’re buying. That’s why we’ve broken these questions out into a few key categories including your home buying budget, environmental concerns, structural issues, details from the home’s history, unique features of the neighborhood, tax issues, and the anticipated cost of utilities and maintenance.
Budget
1. How much house can I afford?
This is the very first question you need to ask yourself. Before you begin the house hunting and home buying process, you need to know what your actual budget looks like. The best way to find this out is to reach out to a mortgage lender for pre approval. Your pre approval letter will indicate the size of the mortgage loan to which you are entitled based on factors like your credit report, your debt to income ratio, and your actual household income. Taken together, these factors are used to calculate the size of your loan, which will in turn tell you how much house you can actually afford.
2. What is your mortgage interest rate?
The other important information that you’ll find in your pre approval letter is the interest rate you’ll incur along with your loan payments. The better your credit score and debt to income ratio, the lower this interest rate will be. For borrowers with less than ideal credit, high interest rates can amount to a significantly higher monthly mortgage payment for the same exact home. As an article from Kin points out, “When you borrow money to buy your house (i.e., take on a mortgage), you pay for the privilege in the form of mortgage interest. Over the lifetime of your loan, your interest rate can have a significant difference on the total amount you pay for your home.”
3. What do I have to provide for a down payment?
You may have a few options when it comes to making a down payment. Historically, new homebuyers have been advised to put down 20% on the total purchase price as a down payment. However, those who can’t afford the cost of a traditional mortgage may be eligible for what is called an FHA loan. This allows the buyer to put down as little as 3.5% of the total purchase price. This may come with several conditions including a higher monthly mortgage payment and the requirement to purchase private mortgage insurance.
4. Will the seller handle closing costs?
It is commonplace but not guaranteed that the home seller will foot the bill for the closing costs–the various administrative fees that must be satisfied as part of completing the home buying process. Many buyers will use this as a negotiating chip when working to reach an agreement on the purchase price. Ask if your seller is willing to pay closing costs before making your offer.
5. How much will my monthly mortgage payments be?
Your monthly mortgage payment will depend on a number of factors including your interest rate, how much money you have available for your down payment, and of course, the overall cost of the property. You should also be aware that your monthly payments will include installments on your homeowners insurance premiums as well as property taxes, the latter of which will likely form a rather significant portion of your monthly payment. We’ll discuss property taxes in greater detail here below (Item #42).
6. How much will homeowners insurance cost for this home?
This is information you’ll need to find out by comparing prices from several different insurance providers. Ask your mortgage broker or real estate agent for a few recommendations on reputable providers, then reach out and seek quotes. In most cases, these quotes will come with no costs and no obligations. Shop around for a combination of the best rates, the lowest deductibles, and the most comprehensive coverage.
7. Are there other offers on the table?
Sometimes, home buying can be a game of hardball. These days, the competition for attractive housing options is fierce, to the extent that many prospective buyers are forced to make offers above the initial asking price in the hottest markets. You’ll want to ask the sellers if there are other offers on the table. Competing offers may impact the final purchase price of the home in question. Indeed, if you are really committed to landing a home in a coveted marketplace, you may need to come in above the asking price just to outbid other prospective suitors.
8. What appliances will the previous owner be leaving behind? It’s pretty commonplace for the previous owner to leave behind major appliances like the refrigerator, washing machine and dryer. Do a full audit of the appliances that will be left behind, and find out what the age is of each appliance. And while you’re at it, you’ll want to find out the age of the hot water heater, the HVAC system, and any other major appliances or systems. Aging appliances and HVAC systems will likely require replacement at some point during your home ownership, which can mean added expenses. For instance, replacing an aging furnace will likely cost a minimum of $8000 to $10000. You’ll want to be prepared for these likely expenses, and if possible, you’ll want to factor these costs into what you ultimately offer for the home.
[Still saving toward your home? Try cutting a few expenses. Check out these 50 tips for saving money in your everyday life.]
Environmental Issues
9. Are there natural hazards such as flooding that I need to be aware of? This is a big one. Find out if any home you’re considering purchasing is above or below the floodplain. While being below a floodplain isn’t necessarily a dealbreaker, it is something you want to be aware of. Flooding can be costly, damaging and devastating. Find out everything you can about the home’s history of flooding, as well as flooding in the neighborhood and region. Has there ever been a major flooding event that impacted the home, caused damage, and/or resulted in an insurance claim? Find these things out before you make your purchase. If a home you’re considering is below the floodplain, you will need to take extra precautions both in terms of the structural security of the home and in terms of acquiring the proper insurance. Most basic homeowners insurance policies do not cover flood damage. For this, you will require specific flood insurance. Find out before you purchase a home, as this will be an added cost.
10. Are there any environmental dangers or hazards in proximity to the home? Find out if the home is close to any structures, businesses or infrastructure projects that can lead to airborne or waterborne hazards. This can include oil refineries, power plants, cell phone towers, major roadways, or major road construction projects. While critically necessary, many of these structures can also carry health risks for those living nearby. Before purchasing a home, make sure you are privy to any and all facilities that might diminish the air and water quality within.
11. Is the home free from radon? Find out if a radon test has been performed, or if there is a radon detector in the home. According to an article from Thrift Diving, “Radon is a colorless, odorless, radioactive gas that’s found in about 1 every 15 homes. Rocks and other things break down in the ground and radon is naturally released (even granite countertops give off low levels of radon–I had no idea!). It’s found in lower levels outdoors, but indoors, it can be much higher. Above safe levels, it can cause lung cancer.” In other words, it’s extremely important to determine whether or not there is radon present in the air and, if so, to take appropriate steps to address it. Radon detectors are pretty affordable and easy to get. You can usually purchase a small, plug-in item at any hardware store that will sound an alarm if radon is detected in the air. If there is radon in the home, you will need to have an air vacuum installed. If you determine this need before purchase, you may be able to insist that the seller install this item.
12. Does the home have a history of insect problems including termites, ants, and/or roaches? While some insect issues can be acute and isolated, others can be environmental and chronic. For instance, homes built atop massive ant colonies will generally struggle with ant invasions on a regular basis. You can expect to fight back the intrusion of these tiny little pests with the approach of every single spring. This may not be a dealbreaker, but it’s something to be aware of, particularly because this will make extermination services an inbuilt part of the cost of living in this home. Find out what kinds of vermin you are likely to deal with in the home, and price out pest control services as you anticipate your monthly or quarterly household budget.
13. Does the home include effective insulation, heating, and cooling for protection against the elements? Ask about the insulation in the walls and ceilings. These are areas from which heating and cooling can readily escape, reducing your ability to control the temperature in your home and forcing your HVAC system to work harder, which will of course cost you more money. Determine whether or not the home has adequate insulation, and if not, you’ll probably want to price out the proper placement of insulation upon purchase.
14. Is there any history of leaking from the roof, flooding from the basement, or other points that have proven vulnerable to water and the elements? Ask about (and look closely for signs of) water damage of any kind. Look closely at the ceilings, walls and floors, especially in a home with a basement. Evidence of water damage including staining, dampness, or the smell of mildew are signs that the home is vulnerable to leaking and/or flooding. This is something you’ll want to know about in advance. A history of leaking and flooding may be a dealbreaker, or it may be an indication that you will need to make certain repairs and renovations to protect the home from further damage.
15. Has there ever been an asbestos inspection or asbestos removal? Asbestos is a substance that is resistant to heat and corrosion. As a result, it was popularly used for many years to coat hot water pipes in homes. However, asbestos can flake off and enter the air, which medical evidence eventually revealed can cause certain types of cancer including mesothelioma. As a result, asbestos has been banned from use in homes and public spaces since 1989. However, for homes built before 1989, it’s possible that asbestos is still present. If you are considering a home that was built in 1989 or earlier, ask if there has ever been an inspection to determine whether or not asbestos is present, and if so, whether or not it is deteriorating and creating an airborne health risk in the home. This is a step you’ll want to take during home inspection, as removal of deteriorating asbestos should be the responsibility of the seller.
16. Is the paint in the home lead free? The answer to this question will likely depend on the age of the home and the amount of time that has elapsed since major renovations have been completed. According to the article from the Environmental Protection Agency (EPA), the use of lead paint on homes and residences has been banned on the federal level since 1978. But many houses built and/or last renovated prior to that time likely have lead paint on their walls. According to the EPA, “Lead-based paint is still present in millions of homes, normally under layers of newer paint. If the paint is in good shape, the lead-based paint is usually not a problem. Deteriorating lead-based paint (peeling, chipping, chalking, cracking, damaged, or damp) is a hazard and needs immediate attention. Lead-based paint may also be a hazard when found on surfaces that children can chew or that get a lot of wear-and-tear, such as: Windows and window sills; Doors and door frames; and Stairs, railings, banisters, and porches.” Inquire about the age and composition of paint on both the interior and exterior of any home that is 45 years of age or older.
17. Have the soil and grass been tested for contaminants? The article from the EPA notes that the exterior paints and chemicals used on and around a house can seep into the ground soil and contaminate the grass, trees, and water surrounding the structure. You’ll want to ask if environmental testing has been performed to determine whether or not this is the case. According to the EPA, “Soil, yards and playgrounds can become contaminated when exterior lead-based paint from houses or buildings flakes or peels and gets into the soil. Soil may also be contaminated from past use of leaded gasoline in cars, from industrial sources, or even from contaminated sites, including former lead smelters. Lead is also naturally occurring and it can be found in high concentrations in some areas.” Evidence of these contaminants may represent a real health hazard, especially to pets and children. This may well be a dealbreaker.
18. Are there trees within 10 to 15 feet of the property that require regular maintenance? Trees can be beautiful, carry beneficial health properties, and can even improve the energy efficiency in your home by providing shade and reducing the cost of cooling in the summer. But trees can also represent several risks to your home, especially if not properly maintained. Any trees within 10 to 15 feet of a home can represent a threat in the event of severe weather. Large branches can break windows, falling trees can destroy roofs, and unstable trees can generally represent a danger to the health and safety of a home’s residents. Not only that, but unseen root systems can cause damage to the foundation and structural integrity of your home. Make sure you take full inventory of these risks, and that you build the cost of proactive tree maintenance into your home budget.
19. How is the tap water? This simple question actually implicates a number of additional questions. How old are the pipes in the house as well as the external pipes? Is there rust, sediment, or other contaminants in the water as a result of aging pipes? And how does the water taste? Is it drinkable directly from the tap or will you require a water filter? What is the condition of the external water line? Many homeowners may not be aware, but if an external water main breaks on your property, the resulting repairs will be your responsibility. Speak to the current owners about the quality of the water and the age of the pipes. Depending on their answer, you may want to install a few filters in your new home and take additional precautionary measures to ensure the integrity of your pipes, all of which will obviously cost money.
Structural Concerns
20. How old is the roof? This is an important question because most standard shingle roofs have a pretty finite lifespan. Depending on the type of roof and the extremity of the elements in your region, a roof can be expected to last between 15 and 30 years. So if you are buying a house with a roof that is on the older side, you should absolutely plan and budget for the purchase of a new roof at some point. Find out the age of the roof upfront so you can begin to prepare yourself for this expense down the line. If the roof is fairly new, consider this a major pro when buying a home.
21. What were the findings of a comprehensive home inspection? No matter how many questions you ask, there is no substitute for a comprehensive home inspection. While it may be the seller’s responsibility to ensure the condition of the home and everything within, it is your responsibility as the buyer to initiate a home inspection and hold the seller accountable for the findings that come from this inspection. According to an article from Assurance Financial, “Typically, you can take advantage of a 10-day inspection period by bringing in a home inspector to assess the house. You may also want to consider hiring people who work in other trades, such as roofing, plumbing and electricity. A home inspector may not be able to catch everything. Bring in someone who is licensed in a specific profession and who will know what to check in a house before buying, tell you what might be wrong with the system and estimate how much it would cost to fix it.” Make sure you do your due diligence now, because once you buy that house, you also buy any problems that have gone unchecked.
22. What kinds of renovations will be necessary after purchase? Some renovations will be part of your wishlist while others may be absolutely necessary and imminent. You’ll want to get a good sense of both before you buy a house. Some pressing renovations may even be necessary before you feel the house is move-in ready. Others may loom on the distant horizon. In either case, they will be expenses that you need to factor into the purchase price of your home. If you envision a major kitchen remodeling, for instance, you’ll probably want to crunch the numbers. Is it worth buying a home that will ultimately require this extremely expensive remodeling, or would you be better off paying more upfront for a home that already has a newly constructed kitchen? These are questions you’ll want to consider as you are house hunting.
23. Is there any evidence of mold? Mold can appear in spaces like the attic, the basement, and the bathrooms. But it can also be lurking in closets, vents, and large appliances. Mold is hazardous to the health of a home’s occupants and may also be surface evidence of recurring water damage. Generally speaking, where there is mold, there is moisture. And where there is moisture, there may be risks of leaking. Whether this is coming from the exterior of your home or from aging pipes, it may well be an indication of deeper issues. Make sure you talk to your home inspector about the potential for mold issues, which should be handled fully by the seller.
24. Are the walls and foundation free from cracks or flaws? Take a good hard look at the walls and ceilings, as well as the exterior of the home. See any cracks near the base of your walls, shifting staircase walls, splits around the foundation, or crumbling bricks on your home’s edifice? These things could be evidence that the building has some structural flaws. If severe enough, some of these flaws or instabilities should be considered dealbreakers. Make sure you fully investigate any structural imperfections in or around the home.
25. Does the house have adequate storage? Obviously, everybody’s storage needs will differ. Be sure that the home you’re purchasing has sufficient storage to match your needs. Determine whether or not non-living spaces like the basement, attic, and/or garage offer practical, clean, and safe storage space. Assess the closet space to ensure that it is proportional to your family’s needs.
[For more on what could go wrong, check out our feature article on why you may not want to buy a “flipped house.”]
House History
26. What is the age of the home? This is critical information for a few reasons. First and most obvious–the age of the home will usually correlate to the likelihood of lurking issues. Older homes may have deteriorating window frames, poorly insulated spaces, aging appliances, outdated HVAC systems, and any number of other impending repair costs due to the natural impact of age. Beyond that, newer construction will typically adhere to more current standards and regulations in terms of fuel efficiency, environmental safety, and more. This is not to suggest that you shouldn’t purchase an older home. Some of the most magnificent and inspired architecture will be found in homes that are well over a century in age. It simply means that you will need to factor the home’s age into the home inspection, the purchase price, and your own plans for repairs and renovations.
27. Can I see the original plans for the home? Speaking of the home’s age, if at all possible, you should inquire about the original plans for the home. Certainly, it is not a guarantee that these plans will be available. According to the article from Kin, “Not everyone will show you their original house plans…but if you can get them, they can be valuable.” For one thing, the current seller may not know everything about the history of the home. The original plans may provide evidence of subsequent renovations, may reveal interesting details about the property lines, and may even point the way to charming features of the original construction that have since been obscured by repairs, renovations and remodeling.
28. Have there been any major renovations to the home? Even if the original plans are unavailable, you’ll want to find out everything you can about changes made to the home over time. Find out if any major changes have been made to the floor plan, if additions have been built, or if and when certain spaces in the home have been subjected to major remodeling. All of this information will be relevant as you take steps to anticipate any repairs or improvements you might need to make. And when unexpected repairs pop up, it can help to know what might be hiding behind a recently constructed wall or relatively newer appliance. And in addition to getting a full rundown on the various renovations and repairs that have been made to the home, you’ll want to know which of these repairs, if any, carry a warranty. This too can help you anticipate likely replacement and repair expenses down the road.
29. How long has the house been on the market? The answer to this question can be pretty telling. Exactly how long has the seller’s agent been working to move this property? If a house has only recently become available on the market but it seems desirable, you may want to be proactive about taking subsequent steps. It’s entirely possible that you’re getting in early on a decent investment. Prepare to get ahead of the competition. Indeed, these days, that competition can be fierce for the right property. However, the opposite also applies. If a house has been on the market for a few months or more, it is likely an indication that there are some drawbacks to the property, whether these drawbacks have to do with the age and condition of the home, the surrounding area, or the asking price of the property. If you are interested in a home that has been on the market for a lengthy duration, make sure you have a full understanding of the factors that have deterred other potential buyers. And if you are still interested in the home, make sure you factor those potentially deterrents into your offer. If a home has been on the market for several months because it is in need of extensive repairs, factor the cost of those repairs into your offer and be sure you’re prepared and budgeted for the work ahead.
30. How long have the sellers been there and why are they moving? Separately from the length of time that a home has been on the market, you’ll want to find out how long the current residents have been there. You should also ask why the sellers are looking to move. The answers may have little to do with the home itself. Or by contrast, the answers may reveal specific features of the house that you might not have considered. Is the seller moving for more storage space, to be closer to top schools, to find a quieter neighborhood, or to downsize? There are countless reasons a seller might move, and their reasons for doing so may not be a deterrent to you. But the information may still be pertinent as you make your decision.
31. Is the electrical wiring safe, sound, and fully up to date? The age of the wiring, circuit breakers, and outlets is important, especially in an older home. Aging or outdated systems and components can be inefficient and costly. Not only that but they can be potentially hazardous. Poorly maintained and aging systems may be vulnerable to shortages, blackouts and even fires. Find out everything you can about the systems powering the house.
32. Did the previous owners have pets and if so, what level of cleaning has been done? Cats and dogs can leave behind all kinds of fur and dander, even if you can’t tell just by looking. These potential irritants or allergens find their way into the carplets, ducts and vents in a home with pets. And while the pets may be departing with the seller, this stuff can remain in your system and in the air you breathe. Even if you don’t have pet allergies, it can negatively impact air purity in your home, making residents more susceptible to allergies and airborne ailments. If the sellers do have pets, request a cleaning of the carpets, vents, ducts and anywhere else that fur or dander tend to accumulate.
33. Does the home have a history of insurance claims? A long and colorful history could be an indication that the home has historically been vulnerable to incidents. As the article from Kin notes, “The easiest way is to ask the seller for a copy of their CLUE (Comprehensive Loss Underwriting Exchange) report, which includes a seven-year record of insurable incidents that have happened to the house.” However, the CLUE only provides an itemized look at the dates and amounts of claims, and will not include details on what has actually occurred. For that, you’ll need to speak directly with the sellers. Those details could provide some fair warning about the types of environmental and structural risks that come with the house.
34. Is the house haunted? We’re just kidding…sort of. The real question here, points out the article from Kin, is whether or not the house has any kind of stigma surrounding it. The horror film cliche suggests you probably don’t want to buy a house that was built atop an ancient tribal burial ground. But in less supernatural terms, you’ll likely want to know if you’re considering a home where an infamous crime has been committed, where a cult once held its social mixers, or where an otherwise darkly colorful history portends bad vibes and invites unwanted attention from your new neighbors.
Features of the Neighborhood
35. Is there a Home Owners Association (HOA)? If you’re looking at a home inside of a development, neighborhood or planned community, there is always a possibility that your new residence is beholden to a Home Owners Association (HOA). If this is the case, you’ll definitely want to know in advance. Indeed, an HOA can come with both pros and cons. As an article from Fannie Mae explains, “The HOA or co-op board is responsible for establishing aesthetic guidelines and rules regarding what you can and cannot do to your home and to maintain the common areas and elements of the co-op or condo building or development. This helps to maintain or increase property value within the community.” It can also come with a variety of services including regular street-cleaning, landscaping, and specialized security. That’s the good stuff. On the other hand, HOAs usually have pretty strict rules about whether and how you can alter the appearance of your home, yard, and paved areas. And you’ll generally need HOA approval before making any major renovations. And of course, you will need to pay an HOA fee, which can amount to between $200 and $400 a month. Count this cost against the amenities offered by your new community as you calculate the expenses that might come with this new home.
36. What is the crime rate like for this neighborhood, if any? Of course, crime happens everywhere. But some areas are simply safer than others. Homes in urban areas typically face a higher risk of crimes such as car theft, home break-ins, and street crime, whereas the crime rate in less densely populated areas is often quite low. In many mid-sized towns and suburban areas, crime rates can vary from one section to another. Make sure you have a full sense of the type and frequency of crimes that might occur, and take this into consideration before making your purchase. In addition to helping you make your decision, you may be able to use this information to request additional safety measures from the seller such as camera and alarm systems, new deadbolts, locking gates, etc.
37. Are the neighbors cool? This is kind of important, especially if you’re looking in an area where homes are relatively close together. In the suburbs, you’ll probably share a fence with a few of your neighbors. In the city, you may well share a wall (or floor or ceiling) with a neighbor. So before you purchase a home, ask the sellers a bit about those (physically) closest to them. Are you looking at a home next to a bunch of loud, late-night partiers, the frequently-rehearsing members of a hard core punk band, or a recluse who appears once or twice a month to water his weeds. This is the kind of stuff you’ll want to know before you make any commitments. Of course, it would take a really bad neighbor to scare you away from a good deal, but you should at least have some word of warning first.
38. What is the average age of residents in the community? You may want to determine the relative age of those around you just to get a sense of whether or not the area is a good cultural fit. A community with a larger senior population may not be the most ideal fit for a young family. A recently retired couple looking to downsize might not enjoy living in an area mostly populated by young, recently graduated single professionals. In other words, you’ll want to ask yourself, who does the area appeal to? If the answer is an age group that is not your own, it may not be the best fit.
39. What are similar homes selling for in the neighborhood? Before you make an offer for a home, make sure you’re getting the right value out of the purchase price. The area surrounding the home is just as critical to its value as the home itself. The exact same home can cost vastly different sums of money depending on factors like the surrounding schools, crime rates, and amenities. So to be sure that a seller is asking a fair price, do some research on the cost of similar homes in the exact same neighborhood. Home selling websites like Zillow or Redfin are extremely useful for this type of research. Compare the home you’re looking at with recent sales, asking prices, or market estimates for homes in the same neighborhood that are of a comparable size and age.
40. What is the quality and proximity of schools? As noted above, there are all kinds of external factors that can impact the value of a home. School quality is extremely high among them. Good schools are often seen as a bellwether for other positive features in a community or region including strong employment prospects, robust public services, and low crime rates. Of course, it goes without saying that this is a major priority for parents looking to purchase. But, whether you are a parent or not, excellent public schools are generally a strong indicator that you’re moving to a good community.
41. Are there opportunities for recreation, shopping, and community engagement nearby? Of course, even a good community can be a boring community. If you’re more of a homebody, this may not be a big deal for you. But if you like to go out, shop, dine, and experience culture, you’ll likely want to seek out an area that offers plenty to do. Find out whether the home you’re considering is near adequate and convenient retail locations, reputable restaurants, walkable Main Street areas, parks and green spaces, hiking and recreational trails, and all the other kinds of things that make it fun to live somewhere.
Tax Issues
42. What are the property taxes for the house? This is one of the most important questions you’ll ask when you consider your home purchase. That’s because it can make up a very significant portion of the monthly payment you’ll make to your lender. Generally speaking, the more costly the home and the more desirable the area, the higher the property taxes. In the vast majority of cases, you’ll pay your property taxes along with your mortgage payment each month. The way it works is that the bank which holds your mortgage loan pays your annual property tax bills, and you repay that amount monthly alongside both your principal loan installment and interest. You can usually get an idea of the property taxes in a given area with a cursory online search. This figure should factor into your calculation of what you can afford in a monthly mortgage payment.
43. Can money spent for interest mortgage payments be deducted from federal taxes? In short, yes–interest paid on your mortgage will be tax deductible, provided that you plan to claim this property as a personal residence. According to an article from Numerico, “The average tax return after buying a house allows you to deduct up to $750,000 in interest on your mortgage, but the IRS only allows that deduction on your residences. If you’re buying a property as an investment, you’re not allowed to claim the interest you’re required to pay on your mortgage.” Make sure you take advantage of all tax benefits for which you are eligible both in the year of your home purchase and in all subsequent years as a homeowner.
44. Are there any zoning issues that may impact future renovations? Find out if there are any limitations on the alterations you can make to the home, the exterior or the surrounding land. Do zoning requirements restrict you from expanding your home in a certain direction, or at all? If you plan to work from home and run a business out of part of your property, will that be legally possible or do zoning laws restrict this kind of commercial enterprise? Find out the answers to these questions in advance, and be sure that the parameters where you hope to live match your own plans for the space.
Costs for Maintenance and Utilities
45. How much do utilities cost? Find out what utilities you’ll need to pay for and how much it usually costs. This will typically include electricity, gas, and water bills. Taken together, what are the monthly costs required to power, heat, and cool the home? How dramatically do these costs fluctuate during seasons of extreme hot or cold? For most homeowners, utilities will combine to make up the largest monthly expense beyond your mortgage and property taxes. Do the math in advance, because this information will be essential to calculating what it will actually cost to live in your new home.
46. What systems are used to heat and cool the home? In addition to the cost of your utilities, you’ll want to know everything you can about the type of HVAC system. How old are the systems that heat and cool the home? Are these major systems under warranty, or are they aging and inefficient? All of these factors can impact the comfort of your home, the cost of keeping it comfortable, and the duration of time before you will likely need to replace some of these costly systems.
47. How old are the appliances that the previous owner is leaving behind? Sellers will typically leave behind major appliances like refrigerators, washing machines, dryers, and dishwashers. As the buyer, these appliances are often simply included. However, that also means you’ll inherit any problems that come with these appliances. And if these appliances are advanced in age, it’s more than likely that they are beyond warranty, are less efficient than more current appliances, and may even be living on borrowed time. You should be aware of any appliances that are nearing or have already surpassed their life expectancy so you can factor those costs into your not-too-distant future budget.
48. Is the attic properly insulated? One factor beyond the age of systems and appliances that can impact both the comfort and cost of your home is how extensively it has been insulated. Older homes don’t always have properly insulated attic spaces. As a result, homes can lose a great deal of heat in the winter, or trap in a great deal of heat in the summer, both of which can negatively impact the temperature control, efficiency and cost to cool and heat your home. If the attic is not insulated, you may want to ask the seller to have this done before making your purchase.
49. Are the windows structurally sound or will they need to be reglazed or replaced altogether? The exact same logic applies to windows. Just as with attics which aren’t properly insulated, aging or deteriorating windows can be a major source of inefficiency. If a home has windows with cracks and air leaks, you’ll be in a losing battle with the elements at all times. And your monthly budget will pay the price. Before you buy a home with old or deteriorating windows, discuss reglazing, weather stripping or even window replacement with the seller first.
50. Are there any rooms that are excessively cold in the winter or hot in the summer? Temperature control can be a quirky thing. Some rooms may have more exposure to sunlight and may therefore get much hotter in the summer. Other rooms may be adjacent to exterior spaces like a garage or enclosed porch, and may let in colder air during the winter. You may want to make improvements to the home in order to address these idiosyncrasies. Factor the likely cost of those improvements into your budget. If these improvements are costly enough, it could factor into the value of the home at the intended purchase price.
[Check out our article on how you can save money on utilities no matter where you live.]
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If you’re shopping for homes and realizing that you could benefit from home loan assistance, you might consider looking into a Federal Housing Administration (FHA) loan. Whereas conventional loans will require you to put down as much as 20% on a new home, the minimum down payment for an FHA loan may be as little as 3.5%. Check out our look at FHA loans to see if this option might be right for you.