Effective Ways Tips for Home Buyers
Know these tips before buying a home :
- Run the numbers! Conduct a financial plan to determine whether you can really afford to take the plunge. Assuming that you have squirreled away your 20 percent down payment (I’m not a huge fan of putting down less than that amount, even though FHA will allow it), there are still plenty of markets around the country where renting makes more sense than buying. Renting might still be the better deal!
- Get pre-approved for a mortgage: Pre-approval is a good gut check on your price range. Gone are the days that banks will fork over cash to anyone with a heart beat. The best way to start is to ask friends for referrals from mortgage brokers and to shop around with banks and credit unions. Make sure to compare apples to apples and to ask the broker the total costs to you at closing. You should also know that once you actually find a home, the mortgage process is on the same pain level as a root canal, only it requires more patience and there’s no Novocaine. That said, You’ll be required to pull a mound of paperwork and be prepared for multiple requests for even more documents as you move towards closing.
- Find an Agent: As much as everyone complains about realtors, I still think that it’s tough to go through the home buying process alone. In some markets, buyers brokers are available, but the most important qualities in brokers are: honesty, experience, good connections with other agents; and good referrals from buyers like you.
- Hire a real estate attorney: This is a major transaction in your life, so don’t try to save money when it comes to legal fees. Even if your mortgage company provides a lawyer, hire your own to help draft all documents and to ensure that your interests are being represented at every step of the process.
- Be an informed buyer: You’re not going to buy a house simply because there’s a pretty photo posted on line, but you can conduct a lot of price research. That said, there’s nothing better than talking to people in the neighborhood for “on the ground” intelligence that can be invaluable.
- Get a copy of your credit report: If you have done so in a while, go to AnnualCreditReport.com and request your free copy. It’s important that you correct any errors on the report before you start the mortgage process.
- Schedule a home inspection: Think you’ve found your dream house? Maybe, but unless you have an engineer walk through the premises with you, you might be buying a new roof in a couple of years. Don’t get freaked out if a problem arises during the inspection–remember that it can often be solved with a simple adjustment in price. It’s imperative to protect yourself so don’t blow off this important step.
- Purchase homeowners insurance: If you have only been a renter, this can be an eye-opener in terms of cost. Make sure that you understand the difference between insuring the structure and the contents; and if you are buying property that is close to water, make sure that you have an agent who can help with flood insurance.
Tips for Home Buyers
- Set enough money aside to cover closing costs without having to forgo eating for a couple of months. You’ve put together a down payment. Be aware that there is also a long list of expenses you may have to pay at closing, depending on where you live and who your lender is. “Closing costs can add up to between two and six percent of your loan,” says LendingTree’s Chief Consumer Officer, Ed Powell. He advises you to ask your lender or mortgage broker to give you a Good Faith Estimate of the loan-related fees you’ll have to pay. Get your real estate agent to compile a list of other expenses.
- Insist on a home inspection. The first really cold day you spend in your new house is way too late to find out that the furnace doesn’t work. The one condition you should always include in an offer to purchase is a home inspection. Find out how much it will cost to fix any defects and have the seller fix them before you agree to buy or deduct the estimated cost from the final price you offer. If the seller won’t help bear the costs and you want to go ahead with the purchase, make sure you can afford the necessary repairs on top of your mortgage.
- Know when to quit. When you act on emotion, rather than reason, you may end up paying too much money. This can happen when you fall in love with a particular house and start fantasizing about how great it will be to live there. Another reason you may be driven to pay too much is that a bidding war triggers your competitive instincts and you must buy the house at all costs which you will regret later.
- Try to coordinate the date you take possession of your new home and your moving date. If possible, avoid a situation where you’ve got to camp out with relatives or find a short-term rental because you must vacate your old house or apartment before you can move into your new digs. Moving once is enough.