Tips For Buying A Home Buying a home can be a huge task. Take the time to educate yourself about what you are getting into before you commit to buying any property. The following tips are here to help you get started.
1. Know your credit score This is one of the biggest factors in determining your loan, and the specifics in it. Know your score, and take the time to repair it if it is lower than 700. A good score leads to a low-interest rate that can save you tens of thousands of dollars over the life of the loan. See how to raise your credit score to get better loan terms.
2. Have a lender Pre-approve you before shopping What to do before buying a house includes getting pre-approved. In fact, it is one of the most important parts of the home buying process!Pre-approval means you should be able to get the loan as long as nothing changes about your financial situation or your credit score. A pre-approval letter also helps when you want to compete with another buyer for a home you love.
3. Shop the lender While getting pre-approved for a mortgage is a significant step for a first-time buyer so is shopping for the best deal possible. You will probably be paying the mortgage for a while so getting the lowest mortgage rate should be one of your prime considerations. Be sure to look at the annual percentage rate you are paying (commonly referred to as the APR) so you can compare apples to apples.
4. Know every expense There are a lot of fees that come with a home purchase above and beyond the mortgage. Insurance, repairs, association fees, property taxes – you should have the income and the budget to handle all of these things if they are relevant to your purchase.
5. Know what you want. Do you want a home or a condo? For many first time home buyers, this is one of the first dilemmas they will try to solve. In fact, many buyers will look at both because they can’t make up their mind. To make sound decisions, you should know the pros and cons of a condo vs. a house.
6. Work with a skilled Realtor that knows your area. Every neighborhood has its unique qualities that you want to be aware of before you buy. An agent that is well-informed about the area will also know what homes there are worth, which will help you avoid overpaying for a property
7. Understand the actual value of any property you are buying. Working with a real estate agent that understands market values in your area is critical if you want to avoid overpaying for your house. In addition to the actual purchase price, there are other fees like appraisal and inspections that can cost you more when you don’t understand the value of the home. Sellers and banks may not be flexible should you ask about adjusting the price later, either.
8. Buy what you are comfortable paying for. You may be cleared for a loan that is far above what you are comfortable paying for. Lean on the side of caution and mortgage only as much money as you are comfortable with. There are a lot of home buyers who will mortgage themselves to the hilt only to find out later they are a slave to their home. Unless you want to be eating spaghetti dinners at home, every weekend don’t stretch beyond your means.
9. Verify all information in the listing. You need to verify that all the information given about the home is right. Sometimes real estate agents put things in the listing that they may not have verified or may just not be aware of the facts. Some of the more common issues that can crop up in a real estate transaction are understanding what stays with a home and what doesn’t.
10. Try to see yourself in the home. Sometimes when you view a home, it will be filled to the brim with the current owner’s things. Learning to see past the clutter to the potential of the home for you may allow you to find better deals than you would otherwise.
11. Use a reputable home inspector. Find a home inspector that is a part of the American Society of Home Inspectors, or someone your real estate agent knows and trusts. You want someone who knows what he or she is doing and is not motivated to miss issues to encourage a sale. It is also advisable to find your inspector if you do not know your real estate agent well.
13. Be sure you understand any HOA that you will be part of. Some homes are part of a homeowner association. All condominiums also have HOAs. These organizations are mandatory if you live in the area, so you will have to pay dues and rely on the association to take care of certain things, like maintenance of common areas.
14. Look for any water-related problems. A home in good condition will keep water where it belongs. Exterior moisture should not be making its way inside. Water flowing through the pipes should be staying in those pipes. Any precipitation that falls on and around the property should be directed towards safe areas, like away from your foundation. Your roof should be functioning as intended.
15. Have a professional look for the presence of asbestos, mold, and radon.
Asbestos was a major building material up until around 1977. Before you buy a home, you should be aware of the presence of asbestos, because it can drive up the cost of repairs and renovations while driving down the resale value. If you are planning on doing any repair work yourself, it is especially important that you know of asbestos and takes proper precautions if it is present.
Mold is one of the scariest issues with home buyers today and with good reason as it can cause health problems. If you have any respiratory problems, the presence of mold in a home can make them far worse. Mold is something that can be fixed when buying a home just know what you are getting yourself into. Any mold remediation that is necessary should be taken care of by the seller.
Radon is an invisible, odorless gas that can be found both in the air and the water. Getting rid of mold in the air is easy and rather inexpensive. Removing radon from water, on the other hand, is much more expensive. On average, the cost to remove radon from the air is around $1000-1300 depending on where you live. Removing radon from water is more like $4000-$7000.
16. Make sure the electrical system is up to par. Current building codes require modern electrical wiring. Most homes built before the 1930s are not up to standard unless they have been renovated. These old homes use knob and tube wiring, which can be expensive to bring up to code. Keep in mind that many lenders and insurance companies will not work with a buyer if the home has knob and tube wiring due to the hazards it creates.
17. Know your plan for furniture. If you have furniture you like, you will want to bring it with you. Make sure your new home can accommodate it. Or, if you plan on buying new furniture, you want purchase a home at a price that leaves you with enough left over to furnish it.
18. Don’t stress the wall colors and carpet condition Many buyers don’t have a vision when looking at homes. As crazy as it sounds there are customers who will turn down a home that meets all the criteria they are looking for because they can’t see past the ugly mauve carpeting and the purple and green wall colors. This is a mistake I see quite a bit. One of the easiest things to change about a home is the color of the walls. Paint is inexpensive and can be applied by you after you buy.
19. Don’t do anything to affect your financial situation Your pre-approval is based on the information given at the time of your application. Any changes, like getting a different job or taking out a car loan, can result in denial of the loan request when you go to purchase a house.
20. Know the potential growth of your investment. Buying a fixer-upper in an area that is growing more popular offers the possibility of an increase in the value of your home. In contrast, buying the nicest house in the area may not have much of an upside.