Is this your first home? Second? Last? Whatever situation you’re currently in, buying a home really is a big deal. It will be the largest single purchase you’re likely to ever make. And even if you have financed a home purchase before and especially if this is your first, there are some things you definitely should do and should absolutely avoid.
THINGS YOU SHOULD DO
Near the top of your list of things to do is to use a real estate agent. When you hire a real estate agent, you’re getting the experience and negotiating power from someone who is in the business full time. And what’s better? You don’t have to pay for this expertise, the seller of the property pays for your real estate agent’s commission. An agent will help you find the right home based upon your own needs and make sure you get the best deal possible.
When you first speak to a real estate agent one of the first things you’ll be asked is if you’ve spoken with a mortgage company. The agent wants to make sure that you’re not only serious about this endeavor but once you make an offer the financing is already arranged. By providing your mortgage company with your loan application, pay check stubs and a credit report review, your lender will provide you with a preapproval letter. If there are multiple offers on a home, the one with a preapproval letter in hand will get the nod.
Take a moment and figure out what you really need compared to what might simply end up on a wish list. “Needs” are those that will disqualify a potential purchase on the spot. If a couple has one child and another on the way and four bedrooms is a requirement, that’s a need. If that same couple wants each of those four bedrooms to have high ceilings, crown molding and wooden floors, that’s a want. It’s the “wants” that will add to your price as well as narrow down the number of homes that meet your criteria.
Why do you want to live where you want to live? Good schools? Established neighborhood? A new subdivision? A downtown condo? Different people have different lifestyles and where you live reflects what you value. Once you highlight certain parts of town you’d like to live in, visit there during rush hours to get an idea what your commute will be. Are there grocery stores and shopping nearby? Your real estate agent will help identify where you want to live but get a thorough, first-hand look on your own.
THINGS NOT TO DO
Once you’ve applied for a mortgage and obtain our preapproval, don’t change anything. Keep your job, don’t make huge purchases and don’t apply for credit anywhere else until you close on your purchase. Your loan application is approved based upon the information on your application and if you change jobs your lender will have to verify employment all over again. It may not sound like a big deal but it is to a lender and it could delay your loan being approved.
Keep your cool when shopping for a home. Those that have purchased homes before will tell you how easy it is to fall in love with the first home you see but you need to compare potential purchases. When you buy real estate, it’s yours. It’s not the type of purchase where you can take your receipt back to the seller and ask for your money back.
Sellers are required to present a document to all potential buyers that list any known issues with the property. If the hot water heater doesn’t heat very well and the seller knows, it’s supposed to be listed on the Seller’s Property Disclosure. If the seller doesn’t disclose known issues that are discovered later, they could be held liable later on. This means getting your own property inspection from a licensed property inspector. Your real estate agent will have a list of inspectors you can choose from.
It’s not that uncommon for those who rent discover they can qualify for much more than they’re used to paying each month. If you’re paying $2,000 per month in rent but your lender says you can qualify for $3,000, take a step back. Only finance what you’re comfortable paying each month. Remember, you’re the one paying the mortgage every month, not your lender.
If you follow these very basic tips, you’ll make your home purchase go so much smoother. But the bottom line is this—remember, you’re the boss here. Don’t let your agent or your lender or the seller push you into making a decision you’re not ready to make. Buying a home is a big deal and it’s okay to have a few butterflies. Just take one step at a time.
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