Buying a home can seem to be quite daunting with more than a couple of key challenges to handle. It’s really tempting to either go with the home that suits your budget or you can continue with your old house. But you can demystify the process of home buying and get the most out of your purchase by simply following some easy and effective tips.
Make your life easier with these handy tips for buying a home.
1. Avoid buying if you’re not staying longer.
If you’re not going to stay in one place for a couple of years, buying a home is probably not a good proposition for you, at least for the time being. Transaction cost for buying and selling a property is huge and you may lose significant amount of hard-earned money if you sell the property sooner – even in a rising real estate market. The situation will be even worse in case the market is in a bearish trend and home prices are falling fast.
2. Take care of your credit profile.
It is almost obvious that you will need to take out a mortgage to purchase a home. And when it comes to getting a mortgage, you must make sure your credit profile is as worthy as possible. You should collect the copies of credit report from any of the credit bureaus at least a couple of months before you start looking for a home. Check if the facts on your credit report are correct and fix any problem you discover. Also you should dispute if you find any discrepancy.
3. Look for a home within your budget.
It will be the best to buy a property which runs 2 ½ times of your annual salary. However, you can also use an online mortgage calculator to get an idea on how your income, outstanding debts and expenditure affect your financial affordability.
4. Check your ability of making down payment.
If your pocket doesn’t allow you to put down 20% down payment upfront, you can still qualify for a mortgage. There is no dearth of private and public mortgage lenders to offer you a low interest mortgage with the small down payment provided you meet other important criteria.
5. Choose a district with good schools.
This is a perpetual recommendation that applies to any homebuyer, regardless of whether or not they have school going children. When the time comes to sell the property, you will see that strong school districts are high in demand in comparison to other districts for most homebuyers and thus it helps in appreciation of the property. Home prices are always high in districts with good schooling facilities.
6. Get professional assistance.
It is true that Internet provides any tech-savvy homebuyer with outstanding access to home listing, but then also most homebuyers prefer to deal with and get help from a professional real estate agent. So it will be good if you contact an exclusive home buying agent who will understand your need, pay heed to your requirement and help you with proper strategies while the bidding process will be going on.
7. Select between points and rates.
While getting a mortgage, you may have the choice of paying extra points – a part of the total interest that you have to pay at closing – against a lower interest rate. If you want to live in the home for a longer period of time – for example, 3 to 5 years or even more – it would be better for you to take the points. Lower rate of interest will help you save significantly in the long run.
8. Get pre-approval.
Getting pre-approved will help you stay away from the grief of staring at homes that is beyond your budget and put you in a suitable position to make a sober and serious offer as you find the most appropriate home for you. You should know the difference between pre-qualification and pre-approval. Pre-qualification depends on the mechanical review of your financial strength while pre-approval from the lender is based on the debtor’s actual income, outstanding debts and credit history.
9. Do proper homework.
Before bidding you should do proper homework. The opening bid must be based on contemporary sales trend of identical houses in the neighborhood. So keep a track of sales of identical homes for last 3 months before making the bid. If such homes have been sold recently at 5% less than asking price, you must make a bid which is about 8% to 10% lower than what the seller wants.
10. Appoint a home inspector.
Your lender is very likely to ask for home appraisal. That is the bank’s means of determining if the house is worth the rate you’re agreed to pay. But you should hire a home inspector, if possible an engineer having experience in conducting home surveys in the area where you’re buying your home. He or she is the best person to identify potential challenges that may require expensive repairing work down the lane.
The above tips are likely to put you on the right path towards filling any gap in your home-buying process and knowledge.