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Buying a home can be exhilarating and terrifying at the same time, especially for first-time homebuyers. When you aren’t sure what to expect, the process can be overwhelming. These tips can help make your first home buying experience (or any consecutive home purchase) as smooth as possible.
Check Your Credit — This is step No. 1 when it comes to qualifying for a home mortgage. Your credit score determines the type of loan for which you can qualify, as well as the overall cost of your loan. Carefully review your credit report looking for any mistakes, collection accounts or unpaid accounts. Ideally, you should be utilizing less than 30 percent of your available credit. It can take time to improve your credit score, but it is not impossible. If your score needs some work, give yourself six to 12 months to repair your credit before you start looking for a new home.
Know How Much You Can Afford — Monthly mortgage payments aren’t the only costs a potential homeowner needs to consider. Future property taxes and home insurance costs should be factored into your budget, allowing you to determine just how much of a loan — and how much home — you can afford. Keep in mind that just because you qualify for a certain amount on your loan doesn’t necessarily mean you can afford it. Track your spending for a few months to give you a good idea of where your money is going. Once you know how much you can afford, you can focus your home search within a specific price range. Don’t forget to factor in closing costs and the down payment. The more you can put down on a home, the lower your payments will be.
Get Prequalified So You’re Ready to Move — In the current state of the market, homes are flying off the market almost as fast as they are listed. Don’t miss out on your dream home. Get pre-qualified so you’ll be ready to make an offer when you find the home you love. During the pre-qualification process, the mortgage lender will check your credit and ability to pay and let you know how big and what type of loan you qualify for. Pre-qualification also gives you negotiating power because sellers will know you’re ready to buy. It is also helpful if you are self-employed or work on commission as pre-qualification shows you have financial backing. Get pre-qualified before you start looking for a new home.
Consider What Type of Home Will Make You Most Happy — What are your wants, needs and must-haves in a home? What is your preference in terms of style and construction both inside and outside the home? Are you looking for a single-family home, condominium or townhouse? Do you want an open floor plan, or a more traditional layout? How many bedrooms will you need today and in the future? What’s the fewest number of bathrooms you can’t live without? Will you need extra space in the garage, or even a separate workshop? While it is handy to know what you’re looking for and to share this list with your real estate professional, it’s also important to keep in mind that it may not be possible to get everything you want within your price range.
Choose Your Neighborhood — Selecting the right neighborhood is just as important as finding the right home. When choosing a neighborhood, be sure to consider factors such as: travel time and distance to work; distance to local amenities like shopping, recreation and dining; quality of the school district; crime rate; and how clean and well maintained other homes in the area appear.
Select an Experienced Real Estate Professional — The agent you choose to represent you in your home buying process can mean the difference between an enjoyable experience and a stressful one. Choose an agent who is experienced and with whom you trust to keep your best interests in mind. Buying a home is a big, costly decision; don’t hesitate to take your time interviewing agents until you find the right fit for you. Karen.advantagesold.com
Don’t Get Attached — When you begin looking at potential homes, it can be easy to let your imagination run wild, dreaming of how you’ll arrange your furniture, what colors you will paint the walls, and watching your children run and play in the backyard. While dreaming can be fun, remember to use your head, not your heart. Finding the perfect home isn’t about the house itself, but how the numbers add up. Is it a good offer? How does the asking price compare to other homes in the area? Does the cost of the home — including mortgage, taxes, interest, upkeep and maintenance — work in your budget? The right home at the wrong price isn’t the right home for you. It’s also helpful to keep in mind that simply because you make an offer on a house doesn’t mean you’ll get it.
Understand the Offer Process — When you’re ready to make an offer on a home, be prepared for some negotiations until you reach a final price and conditions on which both you and the seller can agree. A real estate professional can help you conduct your negotiations throughout the process. When you make your offer, be sure the seller knows you’re pre-qualified, make all negotiations in writing and keep copies for yourself, and be prepared make an earnest money deposit. This is typically one to two percent of the purchase price and shows the seller you are serious about your offer. The earnest money deposit will be given to the escrow company and applied to the final purchase price when you close.
Protect Yourself with Inspections — Sometimes a house isn’t all it appears to be at first glance. Squeaky floors, doors that don’t close and cracks in floors, ceilings or walls can all mean bigger problems. Some things you may view as easy fixes can turn out to be expensive repairs in terms of cost and time. A home inspection gives you protection as the buyer so you’ll know exactly what problems the home may have before you sign the contract.
Take Your Time — Don’t rush into buying into a new home. The decision you are about to make will affect your life for years to come. Take your time doing your research and looking at homes until you find the right home in the right location in the right price range. Once you’ve found a home you adore, remember that there are inspections and piles of paperwork ahead of you. In most cases, the entire process lasts at least 30 days. Buying a home can be stressful enough, without the undue pressure of unnecessary deadlines.
You’re off to a new and exciting adventure. Use these tips to help keep the home buying process as stress-free and enjoyable as possible. Never hesitate to ask questions or slow things down until you are completely comfortable with the decision being made.
Karen & Henry Seale
Realty Executives Advantage