11 Things to Research Before Buying a House

Wouldn’t it be nice if the home buying process were as simple as scrolling through listings, touring a few places, and signing on the dotted line? In reality, buying a home is one of the biggest financial decisions you’ll ever make, and it takes a lot more homework than most first-time home buyers expect.

Don’t worry, though. A little preparation goes a long way. With the help of Amplify’s own Mortgage Loan Originator, Shelton Green, we’re here to break down which factors to consider when buying a house will save you time, stress, and money.

Things to Know About Your House and Finances Before Buying

Here are 11 essential things to know about a house and your financial situation before buying.

1. Know your credit score first.

Before you talk to mortgage lenders, take a look at your credit report. Many buyers enter the home buying process without a clear picture of where they stand credit-wise, and that can lead to surprises at the worst possible moment.

Your credit score directly affects whether you get approved for a mortgage, and what interest rate you’ll be offered. There are three major credit bureaus—Equifax, Experian, and TransUnion—and each uses its own scoring method, so it’s worth checking all three. The good news? You’re entitled to one free report from each bureau every year.

“If you spot inaccuracies on your report, get them resolved before you apply,” Green advises. “Cleaning up your credit ahead of time can mean a lower interest rate, which translates to thousands of dollars saved over the life of your loan. It’s one of the most impactful moves you can make before the home buying process begins.”

2. Get clear on how much house you can afford.

One of the most important things to know about a house before buying is whether you can truly afford it. That means taking a look not just the purchase price, but everything that comes with it.

A common guideline is that your total housing costs (mortgage, taxes, insurance) shouldn’t exceed 28–30% of your gross monthly income. If you stretch beyond that, you may find yourself “house poor”—meaning you own a home but can’t comfortably cover other bills, repairs, or emergencies.

“Emergencies will happen,” Green says. “Water heaters break. Roofs need replacing. When you’re calculating how much house you can afford, build in a cushion. Use a home affordability calculator to get a realistic number and be honest with yourself about your price range.”

3. Look beyond the interest rate.

When comparing offers from mortgage lenders, it’s tempting to zero in on the interest rate. But the rate is only part of the story. One of the key factors to consider when buying a house is the total cost of the loan.

That means paying attention to closing costs, which can include:

• Application fees
• Appraisal fees
• Credit report fees
• Underwriting fees
• Mortgage points

Green says to always read the fine print on any loan estimate. “Watch for balloon payments or prepayment penalties, which are terms that could cost you significantly down the road. The lowest rate isn’t always the best deal when you factor in everything else.”

4. Plan your down payment. 

The traditional down payment is 20% of the home’s purchase price, but that’s not always required. VA loans and FHA loans, for example, allow qualified buyers to put down less.

However, if you put down less than 20%, you’ll typically be required to pay private mortgage insurance (PMI), which adds 0.5%–1% of your total mortgage amount to your monthly costs. The good news is that private mortgage insurance isn’t permanent. You can typically cancel it once you’ve built enough equity—but it’s a real cost to factor into your budget.

Green also offers an important tip about how much savings to keep in your account.

“Don’t drain your savings entirely to fund your down payment,” he says. “You’ll want cash available for closing costs, moving expenses, and those inevitable early repairs. A healthy savings cushion is part of what makes the home buying process go smoothly.”

5. Research property taxes. 

Property taxes are one of the most overlooked factors to consider when buying a house, and they can vary dramatically by location. Even within the same city, tax rates can differ significantly from neighborhood to neighborhood.

Check both current rates and historical trends in the area you’re considering. Property values (and taxes) tend to rise over time, especially in growing markets. That home that fits perfectly in your budget today might feel like a stretch in 10 years if the tax bill climbs substantially.

One tip: don’t rely solely on online calculators. Contact the local tax assessor’s office directly to get the most accurate information for a specific property.

6. Budget for homeowners insurance.

Homeowners insurance is non-negotiable, as most (if not all) mortgage lenders require it.

However, the cost can vary drastically. “If you’re buying in a flood zone, hurricane-prone area, or region with high wildfire risk, you may need additional coverage beyond a standard policy, which can increase your annual homeowning expenses,” Green explains.

Flood insurance, for instance, is typically a separate policy from your run-of-the-mill homeowners insurance. With that in mind, before you get too far into the home buying process for a specific property, be sure to get an insurance quote. An unexpectedly high premium can shift your entire budget.

7. Understand HOA fees before you fall in love with a property.

Are you yearning for a home in that gorgeous new development with the resort-style pool and manicured common areas? Well, it probably comes with an HOA. Homeowners’ association fees can range from modest to significant depending on the amenities offered in the community—and they’re a recurring cost for as long as you own the home.

Before you make an offer, ask:

• What are the current HOA fees, and do they increase annually?
• What’s included, and what requires an additional fee?
• Are there special assessments (one-time charges for major repairs or upgrades)?
• What are the HOA’s rules and restrictions?

“HOA fees aren’t inherently good or bad,” Green says about the fees. “But they’re absolutely one of the things to know about a house before buying in a planned community.”

8. Know the trade-offs between new construction and older homes.

New builds and older homes each come with their own set of benefits and potential costs. A newer home may have a higher sticker price, but it also comes with modern systems, compliance with updated building codes, and often a builder’s warranty. These things increase your upfront costs but may mean lower maintenance expenses in the long term.

On the other hand, an older home may be priced lower, but consider the age of the roof, HVAC (heating and cooling system), plumbing, and electrical systems. The heating and cooling system alone can cost thousands to replace. If you’re eyeing a fixer-upper or historic home, be sure to inquire about the age and condition of the systems that keep your home comfortable, then calculate the realistic cost of renovations before you fall in love with the price tag.

“When you add renovation costs to the purchase price, does it still make financial sense?” Green says. “Sometimes yes, sometimes no. The answer depends on the specific property, your level of passion for DIY projects, and your budget.”

9. Don’t skip the home inspection.

Home inspections are one of the most valuable parts of the home buying process.

Unfortunately, they’re also one of the most misunderstood. A home inspection isn’t just a formality. A professional home inspector will examine the structure, systems, and overall condition of the property and give you a detailed report of any issues.

What should you watch for? A few of the biggest red flags:

• Water damage and mold: Water damage and mold can be hidden behind walls or under flooring, and remediation can be expensive. A good inspector will check for signs of moisture intrusion throughout the home.
• Roof condition: Roof replacement is a major expense.
• Foundation issues: These can range from minor to deal-breaking.
• Electrical and plumbing problems: Outdated systems may not be up to code.

Home inspectors can’t see inside walls or predict future problems, but a thorough inspection gives you critical information before you commit. Never waive an inspection to make your offer more competitive without understanding the risk.

10. Factor in your commute.

It’s easy to focus on the house itself and forget about what your daily life will look like once you live there. But commuting costs add up fast—in both money and time.

“Gas, tolls, parking, wear and tear on your vehicle, and the opportunity cost of hours spent commuting are all real expenses,” explains Green. “If you’re considering a home that would add an hour to your each-way commute, you might want to think again. That can be two or more hours a day that you’re not spending with your family, on hobbies, or simply resting. Many buyers who stretch geographically to find an affordable home end up regretting the trade-off.”

11. Research the schools, even if you don’t have kids.

School district quality is one of the most powerful factors to consider when buying a house, and not just for parents. Homes in highly rated school districts tend to hold their value better over time and are easier to sell when the time comes.

If you have children or plan to, do thorough research on the schools in your target neighborhoods. Look at ratings, test scores, extracurricular offerings, and community reputation.

Just keep in mind that better school districts can also mean higher property taxes, so weigh the full picture.

The Bottom Line: Do Your Homework Before You House Hunt

There are a lot of things to know about a house before buying, but doing your research pays off. The more prepared you are going into the home buying process, the more confident you’ll feel when it’s time to make an offer.

Buying a home is a big commitment—but it’s also one of the most rewarding purchases you’ll ever make. Don’t worry if it feels overwhelming at first. Every buyer has to start somewhere, and having the right information sets first-time homebuyers up for success. At Amplify, we’re here to help you make the home buying process as enjoyable as possible. From understanding your options to getting pre-approved, our team is ready to walk you through the home buying process every step of the way.

This article was first published on April 19, 2021.