Buying a home is going to be the most important investment of your life. Navigating the obstacles and pitfalls to a successful transaction is easy enough if you’re prepared. Here are ten solid tips for potential homebuyers. Use them when looking for a home, negotiating the deal and ultimately settling in for your new life.
Get that credit score up
Not even the wealthy buy homes outright. To get the best mortgage your credit history will have to be as impressive as you can get it. Get copies of your credit report and start fixing any problems immediately. If you owe money, work on clearing that up. It can take six months to a year to find a home anyway. More than enough time to bring that credit score up, giving you access to better rates.
Get a pre-approved mortgage
This goes hand in hand with the first tip. If your credit is sound, financial institutions will actually compete for your business. Many will offer a good credit risk a guaranteed mortgage before they’ve seen a single For Sale sign. Pre-approval saves time and energy and helps you pinpoint properties that you already know you can afford. NOTE: pre-qualification is not pre-approval.
Open with a bid that falls between what you can afford and what you believe the home is worth. Don’t offend the seller. Look at what other homes in the area are going for. Many buyers go low on the first bid, which is okay if the number is explainable. Do you see a lot of work and expense that will go into the property? Is the current owner behind in property taxes? (Easily learned with a visit to the county clerk.) These are all factors that can be used in the first bid negotiation.
Utilize the internet
Technological innovation is all over the web. Real estate sites are using amazing tools for locating and viewing homes for sale. There are online calculators that can put together mortgages and interest rates, closing fees and other costs. These valuation and search tools can be extremely helpful in seeing what’s available where and the best ways to budget.
Don’t forget the big picture
Buying property isn’t simply creating a home. It’s an investment. The purchase can be expensive and labor intensive. New appliances, repairing roofs, plumbing and other costs have to be considered. A home can drain the bank account, especially if it’s a fixer-upper. Sit down and establish total monthly costs and how you’d handle an emergency.
Take as many seminars or courses about home ownership as you can stand. If there’s a local community housing agency, look into it. It’s a great way to learn about the neighborhood. Most people go looking for and buying homes in the warmer months. Get an idea of what the area’s like in the colder climates. Learn about the schools – even if you don’t have kids – and the shopping. Drive by during the morning and evening and see what’s going on.
Home inspection and appraisal
Put the home inspection and appraisal into the budget. In most states a home can’t be sold until the home has been inspected. It should be done whether required or not. Their findings can have a dramatic impact on the selling price if they find repairs that need to be done. An appraiser will tell if the house is actually worth the asking price. Try to use your own and not depend on anyone else’s, i.e., the lender, the real estate agent, etc., each of whom may have had the property appraised.
Don’t be pressured
Sellers will definitely want you to buy NOW. Real estate agents will apply the screws because they have their own mortgage and car payments, and need the commission. Do not let anyone rush you into this most critical decision. Make your list of negatives and positives. Give the neighborhood as thorough an investigation as you want and need.
Brains, not heart
Yes, you love the house but that should not be the sole reason to purchase it. It’s not unusual to make bad decisions when the heart gets involved. You want to get a good house for a great value. You want it to be as structurally sound as possible. You want to make sure it’s a good neighborhood and if you mind driving nine miles to buy milk, or if you’d prefer a house a little closer to a grocery store. Loving it is about painting walls and knowing where the armoire will set the room off perfectly.
Stick with the program
Interest only loans. Pay option ARMs. Both loan scams. One condo seller offered a buyer a lease on a Mercedes if the buyer went ahead with the purchase. Outside of a lowered price or needed repairs, don’t look for incentives to buy a house that have nothing to do with the house.