Home Buying Essentials
Determine Wants /Needs: Your first task after deciding you are ready to purchase a home is to determine what is most important to you. Make a list of all the things you need and the things you want. The things you need are those things that you must have in purchasing a home; versus the things you would really like to have, those are things you want.
Hire a Buyer's Agent
A buyer's agent will represent you and have a fiduciary responsibility to look out for your best interests. Buyer's agents may ask you to sign a buyer's broker agreement, Interview agents until you find an agent you trust and with whom you feel comfortable. Once you have settled on an area, try to hire a neighborhood specialist.
Get Prequalified / Preapproved
Order a free credit report online and fix mistakes, if any. Ask your agent for a referral to a mortgage broker, but also compare rates offered by your own bank and / or credit union. Ask the lender to give you a loan preapproval letter, which means it will verify your income and pull a credit report. Determine your maximum loan amount, but choose only a mortgage type that you understand and a payment level with which you feel comfortable, which may very well be less than the maximum for which you are approved.
Get an Attorney
Start looking for an attorney to represent you, speak to friends, relatives and also your agent. The attorney will be your legal representative, make sure it’s someone you are comfortable with and that they will be seeking your best interest.
Hire a Home Inspector.
The home inspectors’ job is to find all potential flaws and defects in the house. He will tell you what if anything is wrong, and help you to make an informed decision.
10 Things to Consider
1. Don't buy if you can't stay put.
If you can't commit to remaining in one place for at least a few years, then owning is probably not for you, at least not yet. With the transaction costs of buying and selling a home, you may end up losing money if you sell any sooner. Your first task after deciding you are ready to purchase a home is to determine what is most important to you. Make a list of all the things you need and the things you want. The things you need are those things that you must have in purchasing a home; versus the things you would really like to have those are things you want. Here is an example; you need three bedrooms because of the size of your family, but you may not need a swimming pool or 3/4 acre of land
2. Start by shoring up your credit.
Since 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. 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.
4. Don't worry if you can't put down the usual 20 percent.
There are a variety of public and private lenders who, if you qualify, offer low-interest mortgages that require a down payment as small as 3 percent of the purchase price. but some kind of down payment is usually required, this is were your savings come into play.
5. 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.
6. Get professional help.
Even though 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. Unless otherwise stated the agent is usually working for the seller. Call Aaron and he can walk you thru any question or concerns you may have.
7. Choose carefully between points and rate.
When picking a mortgage, you usually have the option of paying additional points -- a portion of the interest that you pay at closing -- in exchange for a lower interest rate. If you stay in the house for a long time -- say five to seven years or more -- it's usually a better deal to take the points. The lower interest rate will save you more in the long run.
8. Before house hunting, get pre-approved.
Getting pre-approved will you save yourself the grief of looking at houses you can't afford and put you in a better position to make a serious offer when you do find the right house. Not to be confused with pre-qualification, which is based on a cursory review of your finances, pre-approval from a lender is based on your actual income, debt and credit history.
9. Do your homework before bidding.
Your opening bid should be based on the sales trend of similar homes in the neighborhood. So before making it, consider sales of similar homes in the last three months. If homes have recently sold at 5 percent less than the asking price, you should make a bid that's about eight to 10 percent lower than what the seller is asking.
10. Hire a home inspector.
Sure, your 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.