Know What You Can Afford

The housing market is in a constant state of fluctuation. It is essential that you understand a bit about the local market before you hire a real estate agent to start searching for a new home. It is usually recommended that you get pre-approved for a mortgage before starting your house search. In fact, many real estate agents won’t even speak with you until you have been pre-approved.

The only way to know what kind of house you can afford is to talk to a lender and get pre-approved for a mortgage. The lender can tell you what price range to look for and anything else you can do financially to make the process easier.

Develop Realistic Expectations

One reason many people end up dissatisfied with their home-buying experience is that they started with unrealistic expectations. Just as you need to know how much you can afford to spend on your new home, you also need to know exactly what to expect from the entire process. This includes how long it could take to sell your old home and to close on the new home.

You also need to be aware of exactly what a realtor will and won’t do for you. Asking your realtor about the services they offer is a start. Beyond that, if you can find out what you can do yourself, you can be more involved in the process. A skilled realtor, like those at RE/MAX Realty One, are much more effective when you know your stuff and leave them to do theirs.

Find the Right Realtor

As with most any service, hiring the right realtor can be tricky. The skills and attentiveness of your realtor can change the outcome of your home-buying experience. If your realtor knows listens well and understands what you want, you’ll find what you’re looking for. If your realtor doesn’t click with you, you may not like any of the homes they show you.  For this reason, it is imperative that you don’t hire the first realtor you come across. Instead, you should take your time and gather information.

Look at online reviews and speak with the realtor to get an idea of how they do their work. If you get along well, understand each other, and can negotiate acceptable terms, hire them! You’ll be glad you did when they help you find and buy the perfect home for you.

Going into the home-buying process blind is definitely one of the worst things you can do. If you don’t take the time to do your research, the odds usually dictate that you’ll end up having a bad experience. This doesn’t mean that you need to spend months learning everything there is about real estate prior to beginning your search for your new home. But, the more effort you put into preparing yourself ahead of time, the better your chances are of happiness when it’s all done

A Good Credit Score

One of the first steps that you must take when buying a home is to ensure that your credit score is as high as possible. While there is no set number a buyer should be at, those who have higher scores will generally be approved for much better loans at lower interest rates. Buyer should speak with their lending company, like the Assurance Financial Group, to get a general idea of what their credit score should stay at.

Consistent Work History

When a loan officer is determining your eligibility for a loan, they are going to look very closely at your employment history. In most cases, they want at least two years at the same job with a stable or growing income. They will also want you to be able to verify that you will be at the same company for the next three years. Those who have not been with the same company for at least two years might need a letter of intent from their new employer.

A Strong Down Payment

The size of your down payment is going to affect your future interest rates. Most lenders require a minimum down payment of at least three percent, but the vast majority of real estate specialists suggest a down payment of 15 to 20 percent. Lenders offer lower interest rates to those with higher down payments because the buyer is risking more of their own money on the transaction.

Patience

Experienced buyers who have strong assets might be able to buy and flip a home in a short period of time, but first-time home buyers will rarely be that lucky. From the moment you begin your search for a home, you might not receive the keys for a year or longer depending on the local real estate market. The paperwork alone generally takes anywhere from 30 to 45 days to complete from the time you submit your first application.

In addition to the down payment and mortgage payments, it is also important to consider some of the ongoing costs of owning a home including insurance premiums, local property tax, and utility expenses.

There is no "free for everyone" down payment option, despite what some people would like you to believe. Let’s first discuss a common type of scam, and then we will cover the legitimate options.

First of all, Beware "Free Money" Down payment Charity Organizations

These organizations work by the home seller making a "charitable donation" to the organization in the amount of the buyer’s down payment (plus an additional smaller fee). The organization would then give the buyer the needed down payment to the buyer as a "gift" that didn’t need to be paid back.

This may sound good on the surface, but the "gift" was not really free money. The truth is that the company added the down payment amount to the total purchase price. Example: if the home seller would normally sell the home for $500,000, he would sell it for $525,000 (5% down payment is $25,000).

So in the end, the buyer will be financing this "free gift", which is not really free at all since the buyer will be financing it as part of the mortgage (which the buyer is also paying interest on). Now that we’ve shown you that there’s really no "free" method, let’s look at the legitimate options that may be available under specific circumstances.

FHA Financing

Requires minimum 3.5% down. Closing costs can be gifted from a family member or nonprofit organization. This method requires upfront and monthly mortgage insurance.

Veterans Administration (VA)

If you are a vet and meet certain qualifications, you may be eligible for a zero down mortgage. No monthly mortgage insurance is required, but instead requires an upfront funding fee unless the vet is disabled.

United States Department of Agriculture (USDA) Financing

These zero down loans are typically given to those in certain rural, low income areas. With this loan there is still an upfront and monthly cost. This type of loan is split into two types: guaranteed housing loans and direct loans.

Conventional Financing

A conventional mortgage is one that isn’t backed by the government. These conventional loans are ones that are backed by Freddie Mac or Fannie Mae. For these conventional backed loans, 5% is the minimum down payment. Private mortgage insurance (PMI) is required unless there is a 20% down payment. This same rule also applies to homeowners refinancing with 20% equity.

Did we miss any good options? What is your favorite method of securing your down payment? Let us know in the comments below.

You may even find a home that you really like and put what you feel is a good offer on it only to find out the seller rejected your offer and went with someone else. You will also see a lot of homes that will be below your standards of what you are looking for. Basically, being a first time home buyer isn’t fun.

If you are buying a home for the first time, there are some important things you should know so that you can make the process easier on yourself. Here are a few tips to keep in mind while you are shopping for your first home.

Review Your Credit

Even though you may think your credit is in order, it is important to review all of the details to see whether or not there are any discrepancies. There may be disputes, incidents of fraud or other things you might not be aware of that can negatively affect your credit score. If your credit score is compromised, you will likely have a more difficult time qualifying for a home loan with a low interest rate.

Choose the Right Realtor

There are likely many real estate agents who work in the area where you want to live, and you will want to make sure that you choose the right agent who understands your needs. Real estate agencies like EXIT Lakes Realty Premier will be able to show you everything from condos and single-family homes to duplexes and townhouses that are currently on the market. The right agent can also negotiate pricing and communicate effectively with sellers and their agents.

Get a Home Inspection

Any property you might want to purchase should be carefully checked over by a qualified home inspector. An inspector can check for things like structural damage and may even be able to detect the presence of radon, asbestos and other hazardous things. Although you may not initially want to invest the time and money, hiring a home inspector could end up saving you a lot financially in the long run and may influence your decision on whether or not to buy a particular home.

Research the Local Market

It is wise to research the housing market in the area where you wish to purchase a home so that you can accurately valuate any properties you may want to buy. Finding out how much other homes sold for in the area will make it easier for you to present a fair offer that will be taken seriously.

When you are ready to buy a home for the first time, it is important that you are properly prepared so that you have the leverage to stay in control of everything throughout the process. Following the right advice can make your house-hunting adventure a success.

Buying a house can be both a fun experience and a challenging one.  Particularly for first-time buyers – but even for more experienced ones – there are some pitfalls that are all too common.  Avoid them by going in prepared.

1. Buying more house than you can really afford. 

While mortgage companies these days aren’t as quick to hand out over-budget loans as they once were, it’s still an all too common mistake.  House-hunting can make that intended budget creep up and then become forgotten altogether when you simply fall in love with a home and decide you’re willing to pay more.

While it may seem like you can afford it according to a handy mortgage calculator, there are more costs to think about, ones that first-time buyers in particular often forget.  There are property taxes, insurance, and utilities, and then there is maintenance and those unexpected repairs that come along.  Determine a budget that accounts for all of those things – and stick to it.

2. Not looking to the future.

The perfect house now may not be the perfect house in a few years.  If you don’t want to move again, make sure you look to the future.  Are you planning to have kids?  Make sure you go for that extra bedroom, and check out the local schools.  Do you want a dog?  Make sure the yard will work.

You should also consider any financial changes that might be in your future, such as plans to go back to school, or staying home with a new baby.  These will affect how much you can afford to pay for your monthly housing costs.

3. Jumping in too fast.

When you walk out of a house after falling in love with it, it’s easy to make a decision without thinking it through.  Make sure you see the house more than once – you’ll likely notice things you didn’t observe on your first walk-through. 

House-buying is one of those things that often involves emotions, but making an emotional decision on a huge investment isn’t wise.  Even if you’re worried that you might lose the house to someone else if you wait, you should still take the time to make sure it’s the right call.

4. Getting into a bidding war.

A little bit like playing the slots, bidding on a house in a competitive market can escalate quickly.  Don’t get carried away by the moment, or you may find you’ve just agreed to pay more for the house than you can really afford.

Make sure your realtor knows your hard limit for spending and will speak up if you are getting too emotional and carried away in a bidding war.  It’s important to plan ahead of time for how much you are willing to spend for the house, even if it’s your dream house.

5. Not researching the neighborhood

You know you love the house, but will you love the neighborhood?  Take a drive around at different times of day to see what traffic is like, and look at a map of the area to see what’s nearby. 

You might want to know before you buy that house that there’s a fire station right around the corner, particularly if you don’t care for sirens in the middle of the night.  Maybe you don’t want to be too close to the high school with the marching band that practices every day in the fields. 

You should also check crime rates, and if you like to walk to the store, find out just how pedestrian friendly things are in your potential new neighborhood.  And of course, time your commute to work.

Buying a home is an exciting time, and to make sure it’s the best possible experience, go in prepared.  Avoiding these common mistakes will help you move with peace of mind.

Know your budget

Get pre-approved for a mortgage before you start searching for a home. That way you’ll know exactly what your parameters are for the price, size and location of your future home. Another plus to being pre-approved is that you will be taken more seriously by sellers than those who are not when you make an offer.

Talk to the experts

A real estate agent will know the details of the neighborhoods you’re interested in and can run comparables. This way, you can figure out how much to offer on a certain property based on what has sold in the neighborhood recently. Real estate lawyers can also be very useful. The experts at the law offices of Steve Butcher Sr. can advise you on important points in the contract and help you file the deeds correctly once the sale goes through.

Variety is the spice of life

Visit many different kinds of houses before you decide what type fits you best. There are so many styles out there, so don’t rule anything out until you see it in person. Also check out different parts of town, even if you think you know the location you favor.

You’re not just buying the house

When you go see a house, drive around the neighborhood, not just up and down the street. Get a good feel for what the rest of the houses are like, and who your neighbors would be. Consider what school district it is in and what parks or stores are nearby.

Think about renovation

Some people enjoy buying an older house that needs lots of work and completely redoing it. Know exactly what you’re in for. If renovations are not up your alley, choose a house that is ready to be lived in, and you can renovate parts of the house that you wish to later.

Perfection is overrated

It is very unlikely that you will find a completely perfect house within your price parameters, and that’s okay. Make a list of everything you’re looking for like the number of bedrooms, type of floor plan or location and then rank them in order of importance.

There are a lot of things to consider when buying your first home, and this will help you to get started. Do some research and talk to professionals to find the house of your dreams.

Judge Your Priorities

What are your biggest priorities when it comes to your new place? Do you need a place that is close to your workplace? Do you need to be close to a gym or park? Do you have an area of the city that you really want to live in? Make a list of what you need, and start ranking the items on the list. Companies like the Wynn Group can help you find a place to meet your needs. This is a good way to make sure that you think about what the pros and cons are of each new place.

Consider Your Parking

Do you own a car or are you planning to own one in the future? Make sure that your new place has some kind of parking available for you. This is a good choice when you are thinking about the convenience of a place. Alternately, consider where the nearest public transportation options are going to be.

Budget Your Move

When you are thinking about a move, think about how much you can put into the costs of moving. You can likely get friends and family to manhandle your things, but remember that movers can be a great way to save yourself some stress. Do you have the time and the money to do this? Be sure to check into the costs of your potential rent and utility costs as they will surely vary in different areas.

Walk Around

If you are thinking of a new neighborhood, take the time to walk around for a while. You don’t really know a place until you spend some time there, and if possible, spending some time in your prospective new neighborhood can help you figure out whether you can really put up with being there. Talk to the different people in your area, especially those with families as they may have a different perspective than those who are single. If you find that the neighborhood is safe enough for families and especially safe for small children, then surely you have found a neighborhood that would be safe enough for a single adult.

Storage is an Option

When you are wondering if a place is big enough for you, remember that storage is an option, especially if you are only going to be in a place for a year or two. It is far better to hang on to things you love if a new place is only going to be temporary.

When you are single and moving, consider what you need to make this move amazing. It is surprisingly easy to get the kind of place that you want if you just keep a few basic rules in mind!

Get Prequalified

Have you ever had a fancy meal at a restaurant only to discover when it’s time to pay that you left your wallet at home? That’s what it’s like shopping for a home if you don’t know what you can afford. Pre-qualification avoids this embarrassment. You approach a mortgage lender who then examines your down payment, income, and expenses. He then tells you how much house you can afford. You can then confine your search to a specific price range.

Don’t Be Too Picky

If you’re spending all this money, it’s understandable that you want your home to meet all your needs. The only problem is there’s no such house out there unless you have it built from scratch. Unless you want to keep searching forever, pare down your list to three or four must haves, a couple of deal-breakers, and a few nice-to-haves. Once a home meets 80 percent of this list, buy it.

Insist on a Home Inspection

A used home can harbor issues that you can’t easily detect if you don’t know what to look for. The foundation may be sinking due to drainage issues or the wiring may pose a fire hazards. A home inspection can uncover these problems. A professional inspector goes through the property looking for problems with the structure. What he discovers may be so major that they force you to cancel the deal altogether. More than likely, the problems he finds will be fixable, allowing you to wrangle concessions from the seller, like a lower price, or a credit for repair.

Prepare for Your Move

According to Halifax Transfer Inc, movers in Halifax NS, you want to prepare for your move to the new home as far in advance as possible. Decide what you want to recycle and give away, so you have fewer things to pack. Get estimates from several reputable movers. (The one you decide on can also advise you on what to prepare and sell you needed supplies, such as boxes and packing tape.) Finally, inform your relatives, friends, utility companies, service people, and post office. Change the addresses for any subscriptions and bills. Some may require up to six weeks advance notice for uninterrupted service.

Commit to Settling Down

If you are purchasing a house, you need to be prepared to stay there for at least five years. The market being as it is, it is absolutely a buyer’s market. To get the best price, you should be willing to live in the house for a while to get the most out of it. If you have to move suddenly, consider back up options instead of turning around and selling the home, like renting it out for some time.

Envision the Future

If you are going to be settled for five years or more, you need to know what your life is going to look like then. Are you going to have kids in school? Are you planning to change jobs? How does that suit the home that you are looking at? Ask yourself important questions that may not matter now, but will be a major factor in the future.

Get a House Inspection

Before you decide to purchase any house, be willing to get it inspected. A home inspection from a legitimate third party is the way to make sure that you know what is going on with regards to repairs and what the house is actually worth. You will need to pay for the home inspection, but it will be worth it.

Drive Around

To really know what a house is like, look to the neighbors. Remember that a house is more than a building; it is also affected by what is going on around it. Drive around the neighborhood to get to know it before you commit. You never know what the local properties are like until you check.

Talk to the Neighbors

It never hurts to get to know the people that you are going to be living next to. The neighbors can clue you in to important things about the property, and the more you are willing to learn about what is going on, the more leverage you will have.

Question the Closing Fees

Closing fees tend to range between 3 to 5 percent of the sale of the house, and they are typically paid to your lending institution. Before you embark on the home purchase, your lending institution needs to give you a good faith estimate of the fees that you will be encountering. Remember that you can negotiate these fees, and that they do not necessarily need to be paid as stated.

Get a Professional

When in doubt, make sure that you get a trained agent on your side. Professionals at businesses like the Mortgage Centre can help you get the house you need at a price that works for you. Trying to do everything on your home when it comes to buying a house can be stressful, and you may miss important steps that can save you a lot in the end.

Take the time to do some research and talk to experts before buying a home so you can get the best deal at the right time for you. Rushing into the process of purchasing a home can lead to financial and emotional consequences you may not be prepared for.

1. Consider Hiring a Realtor

The first step you want to consider doing is hiring a relator to help you purchase your ideal house. There are many realtors out there like Select Sotheby’s. Be sure to consider where you are planning on buying a house, which will help you consider which realtor you want to hire. So whether you are looking at real estate in upstate New York or in Northern California, you want to make sure that the realtor you hire has knowledge about the houses and the area you are looking to purchase in.

2. Get pre-approved for a mortgage to make the search process easier.

First, obtain a pre-approval from a lender for a mortgage. This can give you greater negotiating power, because a seller will know that you have the financing needed to close on the transaction. You will also know the maximum amount of “house” that you can afford.

3. Obtain an inspection of the home to discover any hidden defects.

Second, you should make sure that you get an inspection of the home. Don’t rely on the inspection that a seller provides, because he or she may work with a particular inspector that has the seller’s interests at heart. Hiring your own inspector ensures a greater likelihood that any hidden defects will be uncovered.

4. Calculate the total cost of living in the home, including taxes, insurance, utilities, association fees and other expenses.

Understand the total cost associated with living in the home. This will give you an accurate reflection of whether you can truly afford to purchase the home.

5. Understand your bargaining power.

If you do find defects in the home, then this may enable you to negotiate for a reduction in the home’s price. If the home has been listed for months, then this may also be a sign that the seller is desperate to sell the home. You can use this information to your advantage in negotiating a lower price.

6. Leverage your bargaining power to negotiate with the real estate agent on a favorable price.

Make a list of all of the points that support your bargaining power, and present these points to a real estate agent. Having this list will make it more difficult for a real estate agent to refuse to reduce a price.

7. Consider the long-term investment of the home.

If a home is a little more expensive than you would like, then you should consider whether the home will offer long-term investment opportunities for you. If a home is located near the beach or in a favorable school district, then these could be factors that tremendously impact the home’s value.

8. Agree on a closing date and sign the land sale contract.

Make sure that you agree on a closing date with the seller. Also, ensure that both parties sign the contract to ensure the contract meets Statute of Frauds formalities.

These tips can help you feel more comfortable in negotiating with a real estate agent. They will also facilitate the home-buying process and make it easier for you to achieve your goal of home ownership.

My name is Lizzie Weakley and I am a freelance writer from Columbus, Ohio. I went to college at The Ohio State University where I studied communications. I enjoy the outdoors and long walks in the park with my 3-year-old husky Snowball.

Lizzie found the information for this article from Select Sotheby’s.