Choosing a Location When Buying a Home
After a Buyer determines what their purchase price limits are the next step is to choose an area to begin looking for a home. The choice of location, although somewhat dictated by affordability, is a very important decision. Some important factors in determining location are as follows:
- Tax Rate of Area: Property tax rates might vary from area to area. A prudent Buyer will investigate the property tax rates for the areas that the Buyer is interested in looking for a home.
- Mello Roos: Buyers should investigate and determine whether a community that they are interested in purchasing a home has Mello Roos. Mello Roos are special assessments paid in addition to the regular property tax rates. Not all properties have Mello Roos. Properties that tend to have Mello Roos are newer developments. Mello Roos can affect the amount of money that a Buyer can afford to borrower because they are figured into the Buyer’s debt-to-income ratios by the qualifying lender. If a lender did not anticipate Mello Roos when qualifying a Buyer the amount of money that the lender is able to lend to the Buyer will be reduced. Buyers should make sure that they are willing to pay these Mello Roos before submitting an offer on a property.
- Homeowner’s Association (“HOA”): Like Mello Roos, not all properties have HOAs. Buyers should make sure that they are willing to purchase a home with an HOA. A prudent Buyer will review the HOA documentation associated with a home the Buyer is interested in purchasing in order to establish the rules and regulations of that community to make sure that nothing in the HOA rules will conflict with the Buyer’s needs. For example, if an HOA prohibits RV parking and the Buyer has an RV it is important to know that prior to purchasing a house in that community. Additionally, HOAs have association fees attached to the property that the homeowner must pay on a monthly basis. This fee, which will be factored in the Buyer’s debt-to-income ratio by the Buyer’s lender, was probably not factored into the Buyer’s prequalification which might affect the Buyer’s affordability. Lastly, Buyer’s should consider how much the monthly HOA fees are and what the Buyer will get for that money. Is there a community pool, tennis courts, security, common area maintenance, clubhouse, etc.
- Schools: The quality of the schools in a given area is one of the most important factors in homeownership. Since most homeowners eventually have children Buyers should investigate the school district prior to looking into a particular area. School districts definitely affect the listing prices of homes as well as the future anticipated appreciation of the home. Buyers should not only investigate the school district overall, but also the individual schools associated with a particular property.
- Proximity to Work: Another consideration that a Buyer should consider the locations proximity to their work and the ease of the commute. Buyers seeking to purchase homes a considerable distance from their work needs to anticipate higher monthly fuel costs. With the prices of gas continuing to climb this consideration is crucial.