If you’re anything like I was, you may be a bit daunted by the fact that you’re about to agree to a hefty mortgage that you’ll be paying off for the next few decades. The best way to relieve that anxiety and move forward with the home buying process is to be confident that you’re purchasing the best home at a price you can afford. Here are a few tips to help you make smart decisions about what may be the biggest purchase of your life (no pressure):
1. Decide How Much Home You Can Afford.
I know, I know – shame on me for starting this off by talking about money. But let’s be real here – if you don’t have money, you can’t buy a house. I don’t make the rules, people.
Generally, you can afford a home priced two to three times of your gross income. Remember to consider costs that every homeowner must cover: property taxes, insurance, maintenance, utilities, and community association fees (if any).
2. Start Saving & Get Your Finances In Check.
This may seem obvious, but you’d be surprised by the amount of people who just want to jump into this without thinking about their finances first. Have you saved enough money to qualify for a mortgage and cover your down payment? Ideally, you should have 20% of the purchase price set aside for a down payment, but some lenders allow as little as 5% down. A small down payment will also help to preserve your savings for emergencies. However, the lower your down payment, the higher the loan amount you’ll need to qualify for - and if you still qualify, the higher your monthly payment will be. Your down payment size can also influence your interest rate and the type of loan you can get.
Don’t fret - there are other options as well. For example, my husband and I got our home loan through Veterans United Home Loans because he is a Marine veteran. This worked out well for us as we didn’t have a lot of money to use for a down payment and with a VA loan, we didn’t need to have one. It also helped us to obtain lower monthly mortgage payments.
Check your credit score and start making any adjustments to it to make it better. Pay down those credit cards and make all of your payments on time. These two things will boost your score immensely. And the better your credit score is, the better of a loan you can get approved for.
3. Develop Your Home Wish List.
Being honest about which features are a MUST have and which are a WOULD LIKE to have helps tremendously. I put a list together before we went out to look at homes so I was better prepared – did I really need a fireplace or did I just like the idea of one? Did the kitchen have to have granite countertops or could we install those later on? Come up with your top five must-haves and top five would-like-to-haves to help you focus your search and make a logical, rather than emotional, choice when home shopping.
4. Find Your Realtor.
Real estate agents are your best friend when buying a home – they can provide you with helpful information on homes and neighborhoods when this information isn’t readily available to the public. Their knowledge of the home buying process, negotiating skills and neighborhood familiarity is a life-saver. Best of all, it doesn’t cost you anything to use an agent as they are compensated from the commission paid by the seller of the house you buy.
At STAgency Real Estate, we have a great group of realtors who specialize in different aspects – whether it be a multi-family home, a great rehab property or a luxurious home on a golf course – we have someone for you. (Plus we’re really fun to work with!)
5. Select Where You Want to Live.
This is important to do beforehand as it will help you and your realtor whittle down the areas of interest for you. Make a list of your top five community priorities, such as commute time, schools, and recreational facilities and ask your realtor to help you identify three to four target neighborhoods based on your priorities.
6. Start Shopping For Your Home & Make An Offer.
Start touring some homes in your price range. I took notes on all of the homes we looked at, so it was easier to remember which ones had the features I liked and which ones I never wanted to set eyes on again. This is helpful because you’ll see A LOT of homes (especially if your realtor is on top of things).
Be sure to check out the details of each home, such as the plumbing. Test the pressure in the shower and see how long it takes to get the hot water up and going. Open and close the windows to make sure they function properly. Make sure the garage door opens and closes correctly.
It’s also important to drive around the neighborhood and check out the other homes to see if they are well taken care of. (No one wants to live next to what looks like a trash dump.) Also, check and see if there is enough parking in front of the house for you and your family. Little things like this make a huge difference.
7. Get A Home Inspection.
Once you find your dream home, you’ll need to have it inspected to check for signs of any structural damage or other things that may need to be fixed. Your realtor will usually help set this up for you just a few days after your offer is accepted by the seller. If the inspection turns up significant damage, this contingency will protect you by giving you a chance to renegotiate your offer (or completely withdraw it if things are really bad) without penalty.
After the inspection, you can decide if you want to ask the seller to fix anything before closing the sale. Before the sale does close, you’ll need to do a walk-through of the house to make sure any agreed-upon repairs have been made. This is such an important step because without it, you could wind up having to pay for a new roof right after buying the home when you could have had the seller pay for it as part of the agreement.
Alright, those are my tips for all of you future home-hunters. I just went through this process a little over two years ago and it’s still fresh in my mind because it’s a process and kind of a big deal. My biggest tip to you? Find your self a good realtor that you trust. I couldn’t imagine doing this on my own and was lucky enough to work with a fantastic realtor who showed us the ropes, answered all of our questions and made the house hunting experience an adventure.
If you’re looking for a realtor like that, give us a call at STAgency and let one of our agents find you your dream home.
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