Minnesota Attorney General's Office
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Home Buyer's Handbook
There are two ways to decide what you want in a house. One is to close your eyes and dream. The other is to open them and look around. A little of both may be the best advice for finding the home you want. Look beyond the elegant spiral staircase, the freshly laid carpeting, the kitchen space — or whatever catches your fancy in home design. First, look closely at the neighborhood to decide where you want to live.
Ask yourself: Is it safe? Accessible to work? Near good schools? Check out traffic and noise at different times of the day. Answering these questions and others like them will help you decide where to live. Furthermore, if you’re concerned that your home is a good investment, be sure to find out if property values are rising or falling in the neighborhood. The county assessor’s office or a real estate agent who knows the neighborhood should have the answer. Here’s a list of good questions to ask yourself:
Is the Traffic Heavy?
If you want privacy, have children, or just don’t like noise, you’ll want to know if the street where you may live is busy with traffic. While a street may seem quiet in the middle of the day, be sure to watch and listen during rush hour. Is it a throughway for traffic? Is it an alternate route for local commuters? What about airplane traffic? Is there a flight pattern right over the home you’re thinking of buying?
Can You Handle a Commute?
You may find a better deal on a home outside a city... but if you work in the city, will you be able to stand the longer commute? Take a dry run during your normal drive-time to see if you’re comfortable with the commute. If you’ll be taking public transportation, find out how often buses run, how long the routes take and how far you’ll need to walk or drive to the bus stop.
What is the Community Like?
Glowing community profiles are available from many local Chambers of Commerce. Just ask them for a Resident’s Guide. These guides include information about income levels, taxes, schools and other important factors. Another way to find out about the community is to pick up an issue of a community newspaper at a local store or library. Reading it will tell you what issues are of concern to local residents.
For parents, little is more important than schools when choosing where to live. Feel free to visit schools, talk to the teachers, and ask neighbors for their opinions.
Cultural and Religious Organizations
To find out about local entertainment, cultural events, community happenings and religious organizations, check the listings in the local newspaper and phone books. And find out what’s going on by scouring bulletin boards at local libraries, coffee shops and similar gathering spots.
In addition, the internet can also be a useful tool in answering the questions above.
What Do You Want in a House?
Homes can fit every taste and lifestyle. Perhaps you’d like a traditional home with a large kitchen, a downstairs bathroom and good insulation for those below-zero days. Maybe you want the convenience of a condominium unit or townhouse to avoid the hassles of yard work and other exterior maintenance. Or perhaps you’ve always dreamed of a contemporary, spacious home where you can have privacy — even if you have to build it to get it. Each type of house has advantages and disadvantages to consider before you start house hunting.
Older homes in established neighborhoods often have the old-world charm of broad front porches, quirky nooks and crannies and hardwood floors. That’s what makes them interesting. One of their main advantages is their construction. Homes built before World War II often were made with higher quality materials.
A home with a history has had time to settle on its foundation, so you won’t have to worry about the walls cracking. And a home inspector should be able to give you a good estimate of how long the furnace, roof and other major components will last.
Older homes can also have disadvantages. They weren’t built with modern appliances in mind, so often the wiring is inadequate. Old water pipes and drains may be clogged or leaking, and the heating system and insulation probably aren’t as energy efficient as in a newer home. You may also have to rip out all the old carpeting and wallpaper. Federal law also requires sellers to make disclosures about lead paint.
Despite the drawbacks of older homes, they tend to be less expensive than new ones with similar features. Because their neighborhoods are established, you (or your loan officer) will be able to predict property taxes and home appreciation far more accurately than you would in a new housing development. And, if you make improvements, the tax benefits and resulting higher value of the home may offset some of the costs.
If you can’t find what you want in an older home, you may want to look into newly-built homes. These can either be “builder built,” such as those in a development of new homes (usually in a suburb), or “custom built,” either contracted by you or a contractor you hire.
Tract homes in developments are generally easier to re-sell than custom-built homes because the builder designs them to appeal to the greatest number of people. For example, you’ll probably find a lot of neutral colors. A tract home also costs less than a custom-built home, because a builder saves money by ordering materials in bulk.
New houses may have the benefit of increasing in value faster than older homes because they’re usually strategically located where the population is growing. The area may be in demand in a few years and if you buy early, you may be able to sell at a good profit. New homes also tend to be more energy efficient because they must meet today’s stricter building codes.
The design of new homes has changed, too. For example, the living, dining and family rooms may be combined in one large room to give the illusion of size to a smaller home. Bathrooms, kitchens and master bedrooms may be more luxurious than they would be in older homes. Closets generally are more spacious, too.
New homes do come with a few disadvantages. They are typically more cookie-cutter in style, construction may be a bit flimsier than that found in older homes, and, in the Twin Cities at least, buying a new home usually means relying on your automobile to do just about everything — including running out for a gallon of milk, commuting to work, and driving the kids to school and to their activities.
Condominiums and Townhouses
Condominium and townhouse units give you the worry-free lifestyle of renting, with the financial benefits of ownership. What they offer is usually an updated smaller home — or apartment-style home — that generally costs less than a detached home. “Condos” and townhouses can take many different shapes and forms, but they are usually part of a community of similar units that share common spaces like yards, hallways and health facilities. The owners within a complex are members of an association formed to ensure upkeep and make joint decisions about the property.
Find out these facts before you buy a condominium or townhouse:
- Is it a townhouse, condominium or a co-op? Why is this important? For example, if you purchase a townhouse, you own the ground beneath your unit. This is not the case if you buy a condo or co-op.
- How many units are occupied? How many units are owner occupied?
- Has resale or depreciation been a problem?
- How much will you pay in association dues? This amount can be significant and could be used when qualifying for your loan. Have the dues gone up in the past few years, and how much? Also, ask if the association has planned any major improvements. You may have to kick in extra cash for these.
- Are the common areas well maintained? What do roofs, siding, driveways, swimming pools or spas, hallways and game rooms look like?
- Has the association set up and funded reserve accounts for expensive projects like roof, siding or driveway repairs? Ask the association for a financial statement.
- Read the association declarations, bylaws and rules. Resident associations may ban pets, restrict guest parking and noise after certain hours, and put constraints on renting property.
- Knock on owners’ doors to get acquainted. You’ll be living in close proximity to your neighbors. Ask present owners if they have had any problems with the association.
- Is the association run by the owners or a management company?
Make Your Home Environmentally Friendly
Would you like to save money and the environment at the same time? Cutting gas and electricity does us all a world of good. And home improvements can help:
- Use compact fluorescent lights. These are three to four times more efficient than common bulbs and last 10 times longer.
- Caulk or weatherstrip doors and windows that leak air. Materials cost under $50 and you could save as much as 10 percent on your annual energy bill.
- Install storm windows and doors, and cover them with heavy-duty clear plastic sheets to prevent drafts. This could save as much as 15 percent on your energy bill in cold months.
- Insulate your attic floor or top floor ceiling. Investment costs range from $100 to $1,000 and reduce energy costs about 5 percent.
- Insulate exterior walls. Although often an expensive job, you can reduce your heating and cooling costs by 20 percent.
- Plant trees to shade your home and airconditioning units. You can increase energy efficiency by 10 percent.
- When you use air conditioning, set the thermostat no lower than 78 degrees Fahrenheit. You’ll save as much as 47 percent in cooling costs.
- Add insulation around your water heater. This could save from $8 to $20 a year.
- Reduce the setting on your water heater. Just 10 degrees colder will save more than 6 percent in energy costs.
- Reduce water usage by installing a low flow kitchen faucet and consider a flow controller in the showerhead pipe to restrict water flow.
- Think energy efficiency when you’re buying new appliances, too, by comparing EnergyGuide levels.
To find out more about conserving energy and cutting costs in your home, call your local utility to request a free home energy audit.
Needs and Wants Checklist
You’ve narrowed your home search by location and type of home. Now focus your lens a little closer and think about what space and amenities you’d like inside the walls. The following “needs and wants” checklist will help you focus on homes that meet your top priorities. Start by identifying general needs: How many bedrooms? How many bathrooms? How many square feet? Then think about the amenities you want. A fenced-in yard for the dog? A fireplace that really works? An insulated garage? A porch or deck? A picture window with a pleasant view? Wood floors? Stall showers, not just bathtubs?
Decide which of the above are “needs” and which are “wants.” List the features you must have in a home in your “needs” column. Then list your wants. This is your dream list. Wants are items you can live without or add later. List your “wants” from most to least important.