7
Tips for Buying A Home
I thought it might be a good idea to put
together a primer on home buying to save time and money for first-time
buyers or those wanting a refresher course. First time homebuyers,
partly due to enthusiasm, partly due to ignorance, make costly mistakes
during the home buying process. Many first-time homebuyers overbuy
and them find themselves struggling financially to make the mortgage
payment. Listed below are some tips, which should provide valuable
as you consider buying your first home.
Tip #1 - Plan Ahead. From the
moment you think about buying a home, start planning. Home buying is
a time-consuming and demanding process, and it behooves you to utilize
your management skills early on. Start by requesting a copy of your credit
report. Carefully examine it for errors, and clean it up before
you talk to a lender. Are you currently renting? Check your
lease for an early release clause. If you'll be subject to
penalties, try to time your closing with the expiration of the
lease. During this planning phase, consider your life over the next
five or seven years. Do you plan to start a family? Will an in-law
eventually move in with you? Will you be working from home?
The number and layout of the rooms you require will depend on your
answers. If you qualify for financing based on a dual income, will
you be able to survive on one salary in order to fulfill a long-range
plan, such as one parent staying home to raise a child? Once you've
answered these questions, establish a plan. Then direct the process
with reference to the plan. Don't let the process dictate to you.
Tip #2 - Understand the Home Buying
Process. First-time homebuyers need to ask questions. Lots
of questions. So choose a real estate agent who has experience
working with the uninitiated and is willing to explain the entire home
buying process -- from viewing home to negotiating, to financing, to
escrow and closing -- in detail, and explain it again until you understand
it.
Tip #3 - Don't Get in Too Deep.
It can happen when homebuyers shop outside their budgets or over-extend
themselves. What can you do to avoid getting hooked? Monitor
your expenses for a couple of months. Then based on your findings,
develop a budget that truly reflects your lifestyle. Talk with a
real estate agent who can provide insight into new home expenses and
taxes. Then revise your budget. It's smart to ask your lender
to pre-approve, rather than pre-qualify, you for a mortgage.
Pre-qualification only tells how much you can afford. Pre-approval
goes a step further. Your lender will thoroughly evaluate your
application -- including verifying employment informationa dn financail
disposition - then clear you for a loan of a determined amount.
Having your loan pre-approved gives you a sizeable advantage: Your
new status as a cash buyer manes you more attractive to the seller.
Once you learn how much of a home you can afford, stay within your
bugdet. Just because you've been approved for a certain amount,
doesn't mean you'll feel comfortable with monthly payments at the high end
of the range. Ask yourself if you can live with these
payments. Do they fit your established budget? If not, rethink
your spending limit. Your new home should give you great pleasure,
not hold you hostage. When you relay your price range to a real
estate agent, ask to view properties within that range only. By
restricting yourself, you avaid disappointment later on.
Tip #4 - Be Objective. A
common mistake made by many first-time buyers is allowing themselves to
rulled by the heart and not the head. Curb appeal can be a powerful
force. It's the first time buyer's kryptonite. By disengaging
the mental faculties, it leaves the homebuyer emotionally
vulnerable. To counter its effort, you must be objective.
Brutally objective. Look at many homes, including an assortment of
types of homes. When you view a property, list the positives and the
negatives. Take along a tape measure and record measuremtns of all
the rooms. Make certain your furnature will comfortably fit into the
space. Visit at various time of day to see how much natural light
floods the rooms and check for changes in traffic patterns, especially at
local rush hours. Have an inspector or engineer pick apart the
property. And recruit a friend to view the home to provide you with
objective feedback. Ask if he or she can picture your family living
there and discuss the whys and why nots. Jot down the points for
later review. Also think about how long you plan to own the
house. Would it be dificult to resell? List the
negatives. Could you eliminate or reduce them?
Tip #5 - Research the Area.
Don't stop your inspection at the property line. Examine the
surrounding area. Is it safe, well maintained and moderately
quiet? Is it convient to work, schools and shops? Ask about
zoning and that lovely forest of vacant land across the street.
Could the highway nearby be widened ina couple of years? How far is
the train? Within ear shot? If you're not familiar with the
area, ask friends and colleagues about it. Do your research.
Tip #6 - Conduct a Home Inspection.
Whether you are buying a resale or a new home, a home inspection can
provide you with a great deal of information about the properties
condition. A home insprector will alert you to any major and costly
repairs, which may be forthcoming. The cost for a home
inspection varies with the size of your home. Alist of
reputible home inspectors cna be provided by your real estate agent.
You can also assess the American Society of
Home Inspectors for a list of home inspectors in your area.
Tip #7 - Understand the
Financing. Before signing on the dotted line, understand the
financing. Here's where it helps to be a quick study.
First-time homebuyers have to contend with an assortment of morgage types
and the associated jargon. Your real estate agent can be a great
resource. Shop around and compare. When you decide on a lender
(a bank, your credit union, or a mortgage lender) and a mortgage, gwet
every detail in writing, in participular, the lock-in-rate, points, and
fees. And request a copy of your credit file. You should also
request a good faith estimate of closing costs, which generally run
between 3% and 6% of your loan. Inquire about pre-payment
pentalties. Have the lender attach an addendum that specifies that
no penalties will be imposed for prepaying the loan. Before you go
to the table, read all the documents related to the purchase of the
property. and have a professional review them. You're signing a
binding, legal document. Make certain you understand the conditions
of the loan.
With all that being said, happy
hunting. Remember to have fun and good luck.
