Chapter 1: 10 Things To Know
Ready to buy a home? Before starting, here is a summary of the top things you must know. We strongly recommend sellers to read this too – it can offer you insights on your customers.
1. You must be able to commit
If you can't stay in your new home for more than a few years it's probably not a good idea to own a home at this time. The transaction costs of buying and selling a home are high and you will probably lose money by selling too soon.
2. Take care of your credit
Most people need a mortgage to buy a home. Begin the home-buying process by cleaning up your credit history as much as you can. Order copies of your credit report a few months prior to house hunting. Be diligent about reporting and fixing any problems or errors that you find.
3. Go only for the home you can pay for
Experts agree that you should buy a house that costs around two and a half times your annual income. There are many online mortgage calculators that will help you determine what you can buy by factoring your income, expenses and debt.
4. You don't have to always commit a 20% down payment
Both public and private lenders now offer low-interest mortgages to those that qualify. These can leave you with a down payment as low as just 3% of the price of your new home.
5. Choose an area with good schools
This is good advice even for those that have no school-age children. Why? It helps you when it is time to sell your home. Most buyers place a good school district at the top of their list of priorities. This factor will only increase the value of your property.
6. Seek the advice of professionals
There are many benefits to having a good REALTOR® even though you can find an unlimited number of listings online. Find an exclusive buyer agent so that your interests are protected. A REALTOR® will provide you with invaluable help throughout the bidding process.
7. Know when to choose between points and rate
Mortgages usually offer a choice between paying extra points (some of the interest you pay at closing) for a lower interest rate. If you know you will stay in the house for some time (five or more years), it is probably best to choose points since a lower rate of interest will cost you less in the long run.
8. Get pre-approval before looking for property
Save yourself time and unnecessary disappointment by seeking pre-approval on your mortgage. You will then only look at houses you can afford and be in a good position to make a solid offer once you do find the right home. Pre-approval is different to pre-qualification, which is based on your actual finances. Pre-approval is related to your real income, credit and expenses.
9. Research before bidding
Get information on the sales trends of equally-valued homes in the area of your new home, and base your bid on the information found. Research information from recent months and, if homes were sold for 5% below asking price, make your bid approximately 8% to 10% lower than the asking price to make room for negotiations.
10. Have the home inspected
You lender will require an appraisal to tell them if the house is worth the asking price. However, you should also hire a home inspector to help you identify potential problems and repairs that may prove to be costly further down the road. An engineer that has knowledge and experience of homes in your area is ideal for this.
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Chapter 2: Ready To Buy Property?
