What Families Need to Know Before Buying a Home

When you hear the word “home,” you may recall fond memories from your childhood, such as gathering together for Thanksgiving, waking up to the smell of breakfast on weekends, or cozying up on the couch to watch a movie. Home may be a state of mind, but a house is where all of those memories are made.

Now that you’re a parent, you may be looking for a house of your own—one where your children will take their first steps, and, many years later, return with their own families. Real estate shopping can be a tricky process, but by doing some homework (see what we did there?) in advance, you can avoid many common newbie mistakes. Here’s how to navigate the market to ensure you will find the perfect home to grow your family.

Figure Out Your Finances 

Though it’s tempting to begin looking at houses right away, it’s not the best idea—later on you may realize you’ve fallen in love with a house you can’t afford. Greg McBride, the chief financial analyst for Bankrate, an online tool to compare financial rates, says the biggest mistake prospective homebuyers make is looking at properties before reviewing their finances. “That’s a recipe for trouble,” he says. “Instead, it pays to know how much you can afford and get pre-approved for a loan amount. That sets boundaries around your shopping.”

The first step is to request your credit score from each of the three major credit bureaus: Experian, Equifax, and TransUnion. An ideal score is one that’s higher than 700—it makes you attractive to lenders and could help you get a lower interest rate on a mortgage. Getting your scores early on helps you know where you stand, and also gives you the opportunity to dispute any errors on your credit reports before beginning the mortgage application process with a mortgage lender. 

The next step is to pick a mortgage lender. This can be a bank or a credit union—and does not have to be one at which you have an account. McBride advises shopping around for a lender to find the best rate; you can do this by using tools such as the Bankrate search engine to compare prices in your area. Once you settle on a lender, request a pre-approval letter—this shows home sellers you are a serious buyer and will able to be approved for a loan.

After you decide on a house, place an offer, and the offer is accepted, it is important to know you are not obligated to the mortgage lender who gave you the pre-approval letter. In fact, it’s smart to put in applications with one or two other lenders at the same time, to figure out which one will give you the best price. “That can really give you an apples-to-apples comparison of who’s offering the best deal, both in terms of interest rate as well as the fees that are being charged,” McBride says.

So how much house can you afford? In terms of the mortgage itself, the rule of thumb is to pay no more than 30 percent of your gross monthly income, which would include property taxes, property insurance, and any homeowner dues. When choosing the mortgage loan duration, most lenders recommend a 30-year loan to keep payments manageable while saving money for other things. “It’s better to keep your payments lower so you still have enough breathing room in your monthly budget to be able to save money for other purposes, such as emergencies, retirement, and your kids’ education,” McBride says. “You don’t want to be house-rich and cash-poor.”

The loan may take 30-45 days to be approved, and in the meantime, you will need to pay for a home inspection, home appraisal, title work, and closing costs. Once you own the home and begin making mortgage payments, other fees will include principal and interest on the mortgage, property tax, property insurance, homeowners insurance, and utilities.

RELATED: The Payoff of Teaching Kids Financial Literacy
 

Know Your Neighborhood

Finding the right neighborhood for you and your family is crucial before settling on a home, because this will set the tone for your living situation. Jamie Marcantonio, a real estate broker for Coldwell Banker in Suffolk County, recommends researching neighborhoods and visiting them to get a feel for it. “I always emphasize that [prospective homebuyers] check every single town that they’re looking in and make sure that the school system is highly rated,” Marcantonio says. “That seems to be a real hot button for first-time homebuyers.” 

Visit the neighborhood and take mental notes of what you observe, and keep it in mind when viewing homes. For example, is there a lot of traffic on the main road? Is public transportation readily available? Are there a lot of parks? Is the area close to something undesirable, like a wastewater plant or high-tension wires? 

Another big decision is figuring out whether you want to raise your family in the city or the suburbs. Many first-time homebuyers in the greater New York area are looking to move away from the city and into a suburb. Deciding which town is best can be challenging, but there’s help. Suburban Jungle Realty, for instance, is a real estate advisory firm that connects homebuyers free of charge to “suburb strategists,” who then pair them with towns outside of the city. “Our strategists make sure you’re looking in the right places, asking the right questions,” says Alison Bernstein, Suburban Jungle Realty’s founder. The strategists also provide information, talk about the intangibles, and get homebuyers thinking about the right questions, such as what day cares are nearby? Can I get live-in help if I’m a stay-at-home mom? What kinds of restaurants are in the area? Where are your favorite places to take your own kids?

RELATED: QUIZ: Are You City or Suburb?

Choose a Home

After figuring out what type of home is in your price range, and what town, city, or neighborhood you want to live in, the fun part is going to showings and attending open houses. Marcantonio says finding the right broker is key to finding the right home. She advises homebuyers to interview realtors in person to decide who will be a good fit personality-wise and will be most attentive to their needs. “Go to open houses to see these brokers in real time,” Marcantonio says. “Watch how they’re interacting, interfacing, and what kind of information they are giving.” 

Once you find the right broker for you, sit down with them and begin a dialogue about what exactly you are looking for: Do you want a ranch- or colonial-style house? How many bedrooms and bathrooms do you need? Are you hoping for a large or small yard?

When deciding whether you want to buy something on the lower end that will need renovations down the line or something that’s move-in ready, Marcantonio advises to think about whether you have the money to do renovations and if you are emotionally ready to go through with waiting for the work to be done—it’s not always as fun and easy as some well-loved TV shows make it seem. “Many people think ‘I’ll get a fixer upper, I’ll save money there,’ and in the long run they sometimes end up spending more money because they begin to take walls down and run into more expenses,” Marcantonio says.

Remember that it’s okay to not feel pressured to find a dream house to show off. At the end of the day, a house provides shelter, but the memories you create and share with your family there is what makes it a home.

RELATED:

Real Estate Resources Near You

Find Home Services in Your Area