Buying
a Home
Home Buyer Checklist a Home
Buying a home is not
something to be taken lightly - or something to be entered into without
preparation. Whether you are in the market for a $100,000 home or a $1,000,000
mansion, you need to prepare carefully and make sure everything is ready to go.
The home buying
checklist below can help you get started and reduce the chances of an
unpleasant surprise down the line. Taking care of these items before you start
shopping is an important part of the home buying process.
Set a
Monthly Housing Budget
Setting a realistic
monthly housing budget is essential, and it should be the first step on your
checklist. Financial experts recommend that the total cost of housing,
including the mortgage payment, real estate taxes, maintenance and upkeep,
should be no more than a third of your gross income.
You can use an online
mortgage calculator to estimate the cost of your monthly mortgage payment and
use it to determine a price range when you start to shop for a home. Remember
it is best to err on the low side and buy less home than you can afford rather
than stretch to make the monthly mortgage payment.
Check
Your Credit Score
Your credit score will
help determine the interest rate you pay on your mortgage, or if you qualify
for a mortgage at all. If you do not yet know your credit score, make it the
next item on your home buying checklist.
Many credit card
issuers now include credit scores on their monthly statements. If yours does
not, just contact the credit reporting agencies to get a copy of your most
recent score.
Research
the Local Neighborhoods
You will probably be
shopping in more than one neighborhood, so it is important to research the
local area thoroughly. Look at things like school graduation rates, trends in
violent and nonviolent crime and home values as you select neighborhoods and
make your home shopping list.
You want to buy in an
up-and-coming neighborhood and avoid declining areas. The more you know about
which neighborhood is which the easier it will be to make a wise decision.
Find a
Great Realtor®
Once you have all your
ducks in a row and know how much you can afford to spend, it is time to start
interviewing local real estate agents. You want an agent who knows the local
area and has specific expertise in the type of home you have in mind.
Look for a Realtor®
who holds all the required licenses and has attained the necessary
accreditations. Once you have selected a great agent, you can get on with
choosing the right home for yourself and your family.
Common
Mistakes First Time Home Buyers Make
For most people the
roof over their head will be the biggest single purchase they ever make. If you
are in the market for your first home, you have probably discovered just how
complicated and downright intimidating the process can be.
The potential for
mistakes is all around you when buying a home, and those blunders can be costly
ones. Here are some of the most common mistakes first time home buyers make,
and how you can avoid them.
Buying
Too Much Home
Buying more home than
they can afford is perhaps the biggest mistake first time home buyers make. It
can be hard for first timers to know how much they can really afford, and some
real estate professionals are only to happy to steer those buyers into homes
that are too expensive.
Always do your own
homework and conduct your own research when setting a budget and a price for
your new home. If you are unsure, look for a less expensive home than you think
you can afford - you will sleep better at night.
Not
Knowing Your Credit Score
If you do not know
where you stand financially, you could be in for an unpleasant surprise when
you apply for a mortgage. Always check your credit score before you start
shopping, and take steps to raise your score if it is too low.
Closing unused credit
card accounts, paying down your existing balances and making payments on time
can all boost your credit score and lower your mortgage interest rate. Knowing
your score ahead of time will give you time to react and make adjustments
before you start shopping for your first home.
Failing
to Get an Independent Appraisal
The homes you look at
will no doubt come with appraisals, but in most cases those appraisals will
have been done by the seller's agent. Whether you are shopping for a $100,000
home or a $500,000 one, you should never rely solely on the seller's appraisal.
Getting an independent
appraisal is essential. It may cost you a few hundred dollars, but the peace of
mind will be well worth it. If the appraisal detects no problems, you can sleep
better at night. If deficiencies are uncovered, you can use those problems as a
negotiating tool to get a better price.
Not
Researching the Local Schools
Even if you do not
have kids, it is important to do your homework on the local schools. Poor
schools can affect property values going forward and impact the attractiveness
of your home should you need to sell.
If you do have kids,
failing to research the local school district is even worse. You could be in
for an unpleasant surprise, and a big bill for an expensive private school, if
you fail to do your research
Avoiding these common
mistakes is vital for every first time home buyer. Buying your first home is
complicated, but learning about the mistakes others have made can make it
easier and less intimidating.
How to
Buy a Home with a Small Down Payment
In a perfect world,
every home buyer would be able to put 15% or even 20% down, thus lowering their
monthly mortgage payments and maximizing their equity from the start.
Unfortunately, in the modern real estate market that high level of down payment
is often unrealistic.
If you are buying a
$250,000 home, making a 20% down payment means coming up with $50,000 in cash.
That is a high bar for the average home buyer, and an impossibility for many
others.
The good news is that
there are plenty of ways to buy a home with a much smaller down payment, or no
down payment at all. Knowing where to shop and which programs you may qualify
for can make the home buying process easier and less stressful.
If you are a veteran
of military service, ask about a VA loan. Home loans financed through the
Veterans Administration require no down payment at all, so you can get into the
home of your dreams with no money out of pocket.
In addition, VA loans
have lower credit requirements than traditional private mortgage loans. That
can come in handy if your credit has taken a hit, or if you are recovering from
past financial problems.
FHA loans also have
low down payment requirements. These loans are administered by the Federal
Housing Administration, and this type of mortgage is a popular choice for first
time home buyers. Just ask your real estate agent about FHA loan requirements and
how you can qualify.
Even if you do not
qualify for a mortgage through the FHA or VA, you may still be able to get into
a great home for little or no money down. One of the most attractive, yet least
well known, programs is run by the USDA.
Dubbed the USDA Rural
Development mortgage guarantee, this program is not confined to farmland, or
even rural areas. Even if you are shopping in the suburbs, you should ask your
Realtor® if you qualify for this program. Act quickly, though - the USDA Rural
Development program is such a great deal that it sometimes runs out of funds
before the end of the year.
It is not always easy
to come up with a hefty down payment, especially if you are buying in an
expensive area. Fortunately, there are mortgage programs out there designed to
make buying easier, even if you lack a substantial down payment. The programs
listed above are great for first time buyers - and anyone else who needs a
great deal on a new mortgage.
How to Commit to Buying a Home
There is no doubt that
buying a home is a major commitment, and one you need to be ready for. The
decision to buy a home is not one to take lightly, and it is important to make
sure you are truly ready to make the leap from renter to homeowner.
If you think you are
ready to buy a home, you can use the following guide to make sure. From
conducting a thorough review of your finances to researching programs that can
help with the down payment and financing, these steps can make committing to
buying a home a lot easier and less stressful.
Assess Your Financial Situation
If you are living
paycheck to paycheck and struggling to make ends meet, now is probably not the
time to buy a home. Being a homeowner can be an expensive proposition, with not
only mortgage payments but things like ongoing repairs and maintenance.
Any decision to buy a
home should start with a thorough assessment of your financial situation,
including any cash you have saved, emergency funds, retirement accounts and the
like. Once you know where you stand, you can see how much you have for a down
payment and make sure your income will allow you to make the monthly mortgage
payments.
Look
for Help with Down Payments and Financing
If you fail to put at
least 20% down, you could be on the hook for expensive private mortgage
insurance (PMI), but help may be available. If you qualify for a home loan
through the VA, FHA or other government programs, you may be able to buy a home
with only a small down payment - or no down payment at all.
It is important to
research your options and see which programs you qualify for before you start
shopping. The more you know the easier it will be to find the right home.
Look at Your Job Situation
Your employment
prospects will obviously play a big role in your decision to buy a home. If
your employer is stable and you have good visibility of earnings, the shift
from renter to homeowner can be a smart one. If the company you work for is
struggling financially, you may want to put off the decision and rent for a
little longer.
It is also important
to think about possible relocation before buying a home. If you think you might
relocate for work within a year or two, it might make more sense to buy a home
in your new location. If you think you will stay where you are for the long term,
buying a home is probably a good idea.
No matter what your
budget or circumstances, it is important to think carefully before buying a
home. The commitment to buy a home is a multi-decade one, and you will probably
be paying the mortgage for the next 15 to 30 years. Given the importance of the
decision, it is important to make sure you are truly ready before you make the
move from renting to buying.
Useful House Hunting Tips
Your home is likely to
be the most expensive single item you will ever buy. With so much money on the
line, it is important to make your choice with care and prepare properly for
the purchase.
Chances are you will e
looking at a lot of different homes as you shop for the perfect property.
Having a way to compare those homes will help you make a wise choice. Here are
a few house hunting tips you can use right now.
Make a List of Must Haves and Nice to Haves
Before you attend a
single open house or even contact a Realtor®, you should first make a list of
the things you absolutely have to have, and a second list of the things you
would like to have.
If granite countertops
and hardwood floors are a must, you can cross homes with Formica and shag rugs
off your list. That can save you a lot of time and cut the list of potential
properties substantially.
Get a First Impression and Then Take a Second Look
It is easy to get
overwhelmed and fall in love with a home, but that is a big mistake. Whether
you are attending an open house or scheduling a private showing, walk through
the house from front to back.
Let your first
impression sink in for a few minutes, and then turn around and walk through the
home more slowly. Take a closer look at everything you just saw, and take notes
as you go. You can refer to those notes later and use them to make an informed
buying decision.
Measure
Your Existing Furniture
If you are planning to
bring your existing furniture with you, take measurements before you leave for
the showing or open house. It can be hard to tell how your sofa will look in
the new living room, and having measurements will you will make it a lot easier.
Be sure to get a
complete floor plan for each home look at. You can use that information to
compare homes and find the best value for your money.
Check the Storage Spaces
A lack of storage
space can be a deal killer, so always check the closets, drawers and other
storage areas carefully. Look inside the drawers, assess the closet space and
picture how your items will look on those storage spaces.
Look Under the Rug
You never know what
could be lurking under that rug, so don't be afraid to lift it up. Look for
stains on the carpets and hardwood floors that could be difficult, and
expensive, to clean.
Throw rugs are often
used to conceal imperfections, and many buyers never look underneath to see
what they are hiding. Avoiding that mistake can help you get a better value and
find the best home you can.
Buying a home can be
difficult, but knowing what to look for will make it easier. The above tips can
help you get started - whether you are looking for a starter home or moving up
to a new and larger property.