Buying a home is often the largest investment most people make in their lives. First time home buyers are particularly concerned about handling the process correctly. With a few simple tips, home buyers feel confident about making a solid decision.
Steps To Buying A House
There are several important steps to take before looking at houses for sale. Shopping without a plan or budget is a waste of time and effort.
Get Your Credit in Shape
It is free for buyers to view their credit reports annually. Verify whether there are credit problems and payoff outstanding bills. Buyers with clean credit reports qualify for mortgage loans with lower interest rates and better terms.
A buyer putting more money down on a home has lower monthly mortgage payments. Buyers with at least 20 percent for a down payment typically qualify for better mortgage terms. While there are low money down mortgage loans, this makes monthly payments higher and harder to cover.
Get Pre-Approved for a Mortgage Loan
Apply for a mortgage before going home shopping and get pre-approved for a loan. Buyers with pre-approval are more highly considered if several offers are made on a home. Also, pre-approval gives buyers a definite housing budget prior to looking around. Buyers should avoid paying more than one-third of their monthly salary toward a mortgage. Be aware of predatory lenders who might try to take advantage of inexperienced buyers or people with poor credit.
Review Mortgage Terms
Verify the interest being paid on a loan and whether points are charged. Points are pre-paid interest that may save a buyer in the long run. If buyers intend to stay at the house for an extended period of time, their major concern is locking in a lower interest rate. For short-term buyers, paying points might be a poor choice. Shop around to get the best deal on a mortgage.
Find Out About Assistance Programs
Some government agencies offer assistance to buyers who meet a certain criteria, such as first time home buyers or veterans. Research potential assistance programs and apply for them before shopping for houses. Assistance may include help with a down payment, partial payment of closing costs or lower interest rates on a mortgage loan.
Home Buying Checklist
An alluring home can lure eager buyers into a deal before they have all the facts. While a house might be appealing, there are several major criteria to consider before making a final decision.
Research The Neighborhood
Real estate agents are prohibited from discussing the quality of a neighborhood. Buyers are responsible to research the neighborhood on their own. Review online resources to find out the crime rate, demographics and whether the school districts are good. Homes in better neighborhoods are easier to live in and sell.
Have a Personal Checklist
Depending on their budget, buyers may not get everything they want on a checklist. However, having a checklist helps buyers stay focused on what they really want. Include the number of bedrooms, bathrooms and appliances on the list. Optional items might be a fireplace, backyard garden, separate laundry room or other personalized comforts. A checklist also helps real estate agents find the best prospects for potential buyers.
Review Local Housing Values
Before making an offer on that fantastic home, review sales trends in the neighborhood. Find out what comparable houses sold for and bid accordingly. This is a long-term purchase and buyers should not pay more than the home is worth. Knowing the local comparable home sales gives buyers more negotiating power.
Conduct An Organized Search
Buyers might see dozens of homes before making a final decision. Be organized during the search. Have a notebook with a page for each home. Take digital photos to remember what homes look like days or weeks after viewing them. Do a careful comparison before deciding which home is the right one.
Home Buying Process
Closing on a home is exciting and full of unexpected details. Be ready for whatever happens along the way by enlisting the assistance of professionals.
Work With A Real Estate Agent
Most real estate agents represent the seller. Try to work with an exclusive buyer agent to get the best deal. Either way, all real estate agents have access to the latest home listings so buyers find better prospects.
Hire An Attorney
Once buyers make an offer and the seller accepts it, binders and contracts are signed. Buyers should hire an attorney to carefully review terms and protect their interests. There are documents with many pages and lots of fine print. An attorney is familiar with the home buying process and knows when to negotiate terms. Attorneys also help buyers figure out closing costs and how to handle possible housing defects.
Hire a Home Inspector
While a home might look great to the naked eye, a professional home inspector might find hidden defects. Before buying a house, it should be inspected for termites and structural problems. Severe issues might break the deal while minor ones could be paid for by the seller. If buyers purchase a home with defects, they become their problem and expense. The cost of paying for a home inspector and attorney is worth every penny to ensure buyers are getting into a viable deal.
Shop for Homeowners Insurance
Home buyers need to get a homeowners insurance policy. Find out about insurance before deciding on a house. Houses in certain areas with flooding or natural disasters might be most costly to insure. Part of the monthly expense of owning a home is cover the cost of homeowners insurance. Look for a policy and shop around to get the highest level of coverage for the lowest price.
Purchasing a home is a major investment and the place where buyers will live for a long time. Being well-prepared helps buyers make an educated, rational decision for a happier future.