A good location is every real estate agent’s chant, and there is a good reason behind it. Choosing a good neighborhood is one of the most challenging and important parts of your house hunting journey. Even if there is a general location where you want to buy your home, it can be hard for you to decide where your home should exactly be located. Below are some tips that can help home buyers like you to make that important decision.
Investigate the Home Buyers market
Cost is a significant factor when deciding the location of your home. That’s the reason we always advise potential home buyers to start their journey with a pre-approval letter first, so they’ll have an idea about how much they can really afford. At Lendova, you can get your basic pre-approval letter for free and in just 15 minutes.
Once you’ve decided what your final price range is, investigate the property values and the home buyer market trends in the areas you want to buy your home. You can always contact us, and one of our market specialists will present you with some quick stats on the historical and present comparison about a specific area.
To assess whether a neighborhood is within or beyond your budget, concentrate on the home buyers Market Action Index and the Median List price. A Market Action Index above 30 shows that it’s a competitive market, so you will need to bid above or at the listing price to win a home in this area. In this market, you will have to keep your preliminary house budget a little lower than your full budget. If you can manage to get an underwriter-reviewed verified pre-approval letter, then your offer might be considered more competitive in such hot markets.
Alternatively, if Market Action Index is less than 30 in a particular area, then it shows that it’s a buyer’s market and you might have some room for negotiation to bid below list price in these neighborhoods.
Decide your monthly budget
Your monthly expenses can also have an effect on making a particular area more or less affordable. For instance, take your property tax rates. These taxes are determined locally, and in some specific areas, these taxes can be quite high, thus adding considerably to your monthly expenses. Tax rates may vary over time, so your tax expense could potentially rise.
Study your desired locality’s tax rates to get an idea about the present rates. Moreover, to get an idea about how much you might have to pay in the future, research how much the rates have increased in the last five years. If you start comparing tax trends in different localities, you might find which neighborhoods your budget could go farther. For instance, a $250,000 house in a district with a 4.5% tax rate might have the same monthly payment as a $325,0000 house in a neighborhood with a 3.5% tax rate.
Monthly HOA (Homeowner’s Association) fees can also influence some specific neighborhood’s affordability. HOA fees are charged in some single-family home neighborhoods and condo communities to improve and maintain common areas within the association. These additional HOA expenses can become significant as they can cost you several hundred dollars every month.
Check to see whether HOA fees are common in the neighborhoods you’re planning to buy home. Generally, HOA fees are noted in the property listing. Your desired neighborhood pool will become narrow, in case you don’t want to have HOA fees. However, if you’re happy to pay HOA fees, then add these expenses to your monthly budget and adjust your price range accordingly.
See if the home matches your lifestyle
It’s very important to find a community that can support your lifestyle. You should ask yourself what kind of neighborhood is suitable for you? A quiet family-friendly town or a lively area for singles? A newer development or an older community? A white picket fence area or a location where condos are common? If you have time, then explore different neighborhoods and try to talk with the locals and see whether you can easily adjust.
There are also some tangible factors to take into account, such as safety, school quality, local amenities, commute times, and public transportation. Take time to prioritize the factors you want in your neighborhood. What are your would-like-to-haves and must-haves? Then do some online research about specific neighborhoods and make a ranking list of the neighborhoods according to your priorities.
Suggestion: Remember properties in communities with good schools can be a good investment for the future even if they aren’t on your priority list currently.
Look out for red flags
Bear in mind that you’re not just purchasing a home, but you’re also investing in a community. As you look at different locations, watch for things that can affect the value of your house in the future when you finally decide to sell it. Try exploring different areas on your own and see whether any big construction projects are going on in those neighborhoods that can affect the future value of your property or your day-to-day life. Whether it’s a commercial development or a new highway under construction? Even though those projects can boost the housing prices in the locality over time; you might not like to face the troubles that those projects might cause, such as a loud construction noise or daily massive traffic jams.
You should also focus on signs of too many foreclosures or abandoned buildings or if there is a sudden drop in property values in a particular locality, then that neighborhood might not be in the best shape. These problems indicate that if you buy a home in this area, it might not give you the highest return on your investment.
At Lendova, we believe in providing affordable mortgage solutions for all home buyers. Please call us today so that we can provide you with a custom-tailored solution or please visit our website at www.lendova.com