Published: April 01, 1995

Buying a Home

A fact sheet that discusses several important points to consider before buying a home, such as "Can you afford it?" and "Are there permits on file for all repairs and improvements?"

Note: Last revision 1995. Use this information as a general guide only; consult with a local consumer group for laws specific to your state.

Buying a home

Your home will probably be the most important purchase you will ever make. Buying a home can be an exciting and rewarding experience, but it is also hard work. Once you find the home you want, before you buy, please STOP to consider the following:

Can you afford it?

You may need to spend money for an appraisal of the property, the loan application and related fees just to qualify for a loan. Once you obtain a loan, you may have to pay mortgage insurance payments and/or impound account fees every month in addition to the monthly loan payment. Property taxes must be paid annually, usually in two installments due in April and November. You will also need homeowner's insurance to protect you from losses due to flood, fire, riot, earthquake, burglary or visitors who are injured while on your property. While the interest on your loan is deductible from your income taxes, this deduction alone usually won't make up for all expenses associated with buying a home. It is recommended that you keep an amount equal to at least 2 months of payments in the bank in case of an emergency or interruption in income.

What do you know about the neighborhood?

It looked great the day you visited. But before you buy, go back at different times and at night. Are there parking, noise or crime problems?

Is the house in good condition?

Always have the property inspected by a professional inspection service. Accompany the inspector through the house and ask questions. The $150-$300 cost is well worth it and you can negotiate to try and have the seller pay the cost. California law requires a termite inspection. Make sure you obtain a copy and disapprove questionable items within the time allowed. Negotiate to have the seller purchase a home repair plan for you to pay the cost of any unforeseen repairs to the plumbing, heating and electrical systems, roof and structure, or purchase the plan yourself.

Are there permits on file for all repairs and improvements?

Have your real estate agent and the home inspector obtain copies of all building and other permits for the property and check to see that a permit was obtained for all repairs and remodeling work. If any of this work was done illegally, you will have big problems later. You will either have to remove the illegal improvements or pay to have them done properly plus any applicable fines. There are no exceptions.

If you plan on making major changes after you buy, will they be legal?

If you plan to add improvements to the property or operate a business or convert a non-living space into a living space or rent out part of the property later, check out all applicable zoning and building codes BEFORE you buy. Even if the Realtor says there will be no problem, you cannot rely on her/his statements. Your plans for the property may be prohibited by law.

Is the owner offering to lease the house "with an option to buy"?

Never enter into a lease with purchase option transaction unless you have obtained the advice of a reputable attorney and all terms are in writing and signed by all parties. Many first time home buyers have lost their life savings after entering into a bad lease-with-an-option-to-buy transactions. If the seller is keeping title to the property in his/her name, you are taking the risk that the seller will not live up to his or her bargain or will default on the mortgage payments and lose the property in foreclosure.

Have you obtained all available information?

Take advantage of the many seminars for first-time buyers put on by banks, consumer credit counseling organizations and various legal aid programs. Be realistic about what your income is now and what you can afford.

© Copyright 1995 Legal Aid Foundation of Los Angeles

Electronic publication funded by BACEF

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Keywords

Buying Home, Buying A House, Housing, Buy A Home, Comprar Una Casa, Comprar Una Vivienda, Vivienda, Casa, 買房子

Sponsors

Bank of America Consumer Education Fund (BACEF)

Notes

Category

Housing   ♦   Buying A Home   ♦  

Copyright

© 1995 Consumer Action. Rights Reserved.