8 Tips To Make You a Smart Home Buyer
Whether it’s your first or fifth — home buying is a bumpy process. Between the financing, the number of homes on the market in your price range that meet your needs, the offer process, the appraisal and the inspection, there’s a lot that can go wrong.
But there’s a lot that buyers can do to make the process smoother. Here are eight tips.
Check your own credit
Your credit will play a huge part in what types of loans you may qualify for. You may or may not be able to change your income at the moment or be able to save a 20% down payment on a home. But you can always work on improving your credit score! Verify that it is accurate. Get all errors and inaccuracies corrected. Your lender can tell you which payments to prioritize and what to do to help improve your credit score.
The pre-approval process
Being pre-approved vs. pre-qualified means a lender has verified your information and credit rating and agreed to provide you with a specific amount of money. You are in a better position to go house hunting with this financing commitment. You know the maximum you can borrow, and later your offer has more power with the seller because he knows there won’t be a financing problems.
Hire a real estate expert
As a home buyer an agents services are FREE to you! A real estate agent can help guide and advise you. Realtors are professionals and should be judged by their credentials, knowledge, experience, track record, and references. Research Home sale prices in your area. It’s always a good idea to research the neighborhoods you are thinking about buying a home in. Check on active homes, pending and sold sales. What are the average days on the market and average sold price? At this point it’s a good idea to speak An agent can also help with the pre-approval process, along with other questions about the costs of homeownership like maintenance/repair costs.
What can you actually afford
The down payment Most first time home buyers can’t afford to put 20% down payment on a home. In this case, you will end up having to pay PMI (private mortgage insurance) on your home loan. There are a number of down payment programs that will help you secure some or all of your down payment.
Along with your PMI insurance, you will have things like property taxes & homeowners insurance. Depending on where you buy you may also have to carry good insurance. Don’t forget about closing costs, new furniture needed to decorate your home, lawn mower and gardening tools you may not have ever needed before along with the costs of maintaining your home. Your real estate agent should be able to help advise what to expect as far as home maintenance.
What can you afford? The experts say to not to spend more than 1/3 of your monthly income on your mortgage payment (including insurance, taxes and other costs). A mortgage broker can help you with any questions you may have. The pre-approval process takes some work on your part but it’s pretty painless really. You can expect to have to provide taxes for the last 2 years, bank statements, credit report, check stubs etc. in order to complete your pre=approval. In a seller’s market which most of the US is in you will denitely need your pre-approval in hand BEFORE you start shopping for a home.
Wants vs. Needs?
After you have gone through the pre-approval process, you can now start to make your wants & needs list in a home. If you have a dog, then a condo in the city that doesn’t allow pets probably isn’t a great option for you. But, a single family home with a fenced backyard would be a great t for you! Again, this is an area where an experienced local real estate agent can help you nd your dream home.
Keep in mind your wants and needs might change over time. Expect to be in your home for at least a couple of years. The average time is 7 years. You may not have kids now, but if you’re planning on having children, then it’s a good idea to consider school districts as well.
What are your dealbreakers Dealbreakers are important. There is a difference between dislikes (paint color) and dealbreakers (no yard). Dislikes can more than likely be changed or dealt with, deal breakers can’t. An experienced real estate agent can help guide you with these decisions. Your realtor can also help you take care of any of those dislikes before you move into your new home.
One tool that real estate agents have that the general public doesn’t, is access to the local multiple listing service (MLS). Once you understand your must-haves and your dealbreakers, your real estate agent can set up a personalized alert anytime a home that meets your exact criteria is listed on the market. In a hot sellers’ market this is still the BEST tool to get new home alerts instantly and far more accurate than Zillow.
Think competitive but reasonable. No buyer likes a bidding war, but you’ll want to make an offer that the seller will consider competitive. At the same time, you don’t want to pay more when the seller would possibly accept less. An experienced real estate agent can help you determine an offer that’s a good deal for you and priced high enough to capture the seller’s attention as well.
There are concessions you can make to sweeten the deal. Such as, selecting a close date that best suits the seller. Offering the seller free rent back if they need extra time to relocate. Or offering to split the price of any necessary repairs discovered in the inspection. Your real estate agent can walk you through your options.
The home inspection is a very important step in the home buying process. Make sure you and your agent are present for the inspection. Listen carefully to any concerns that he or she has about the property. Ask questions about common problems that the inspector sees in the home. After the inspection, you will have a good idea of what you will ask the seller to repair and what you’re okay taking on yourself.