The top 10 things you need to know when buying a home.
1. Get Pre-Approved for Your Home Loan
There’s a big difference between a buyer being pre-qualified
and a buyer who has a pre-approved mortgage. Anybody can get
pre-qualified for a loan. Getting pre-approved means a lender has looked
at all of your financial information and they’ve let you know how much
you can afford and how much they will lend you. Being pre-approved will
save you a lot of time and energy so you are not running around looking
at houses you can't afford. It also gives you the opportunity to shop
around for the best deal and the best interest rates. Do your research:
Learn about junk fees, processing fees or points and make sure there
aren’t any hidden costs in the loan.
2. Shore up your credit.
you most likely will need to get a mortgage to buy a house, you must
make sure your credit history is as clean as possible. A few months
before you start house hunting, get copies of your credit report. Make
sure the facts are correct, and fix any problems you discover.
3. Get professional help.
the Internet gives buyers unprecedented access to home listings, most
new buyers (and many more experienced ones) are better off using a
professional agent. Look for an exclusive buyer agent, if possible, who
will have your interests at heart and can help you with strategies
during the bidding process.
4. Aim for a home you can really afford.
The rule of
thumb is that you can buy housing that runs about two-and-one-half times
your annual salary. But you'll do better to use one of many calculators
available online to get a better handle on how your income, debts, and
expenses affect what you can afford.
5. Know what you want.
Write down a list of features that the property must have, including the
number of bedrooms and bathrooms you require, whether you need a 3
car garage for your Range Rover and Ferrari , or perhaps a generous
backyard for your Golden Retriever. Once you know exactly what you’re
looking for, you can narrow down the list of homes you wish to inspect.
6. Buy in a district with good schools.
In most areas, this advice applies even if you
don't have school-age children. Reason: When it comes time to sell,
you'll learn that strong school districts are a top priority for many
home buyers, thus helping to boost property values.
7. The science of bidding.
Your opening bid should be based on two things: what you can afford
(because you don’t want to outbid yourself), and what you really believe
the property is worth. Make your opening bid something that’s fair and
reasonable and isn’t going to totally offend the seller. A lot of people
think they should go lower the first time they make a bid. It all
depends on what the market is doing at the time. You need to look at
what other homes have gone for in that neighborhood and you want to get
an average price per square foot. Sizing up a house on a
price-per-square-foot basis is a great equalizer. Also, see if the
neighbors have plans to put up a new addition or a basketball court or
tennis court, something that might detract from the property’s value
down the road. Sellers respect a bid that is an oddball number and are
more likely to take it more seriously. A nice round number sounds like
every other bid out there. When you get more specific the sellers will
think you've given the offer careful thought.
8. Don’t try to time the market.
Don’t obsess with trying to time the market and figure out when
is the best time to buy. Trying to anticipate the housing market is
impossible. The best time to buy is when you find your perfect house and
you can afford it. Real estate is cyclical, it goes up and it goes down
and it goes back up again. So, if you try to wait for the perfect time,
you’re probably going to miss out.
9. Know the neighborhood.
Before you buy, get the lay of the land – drop by morning noon
and night. Many homebuyers have become completely distraught because
they thought they found the perfect home, only to find out the
neighborhood wasn’t for them. Drive by the house at all hours of the day
to see what’s happening in the neighborhood. Do your regular commute
from the house to make sure it is something you can deal with on a daily
basis. Find out how far it is to the nearest grocery store and other
services. Even if you don’t have kids, research the schools because it
affects the value of your home in a very big way. If you buy a house in a
good school district versus bad school district even in the same town,
the value can be affected as much as 20 percent.
10. Hire a home inspector.
lender will require a home appraisal anyway. But that's just the bank's
way of determining whether the house is worth the price you've agreed to
pay. Separately, you should hire your own home inspector, preferably an
engineer with experience in doing home surveys in the area where you
are buying. His or her job will be to point out potential problems that
could require costly repairs down the road.