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Buying a home can be an emotional, time-consuming,
and complex process. There are a few things
that you can do to help make the process go
as smooth as possible:
1. Check your credit.
Before you apply for a home loan, regardless
of your credit, it's a smart idea to obtain
a copy of your credit report from the three
major credit bureaus and review the information.
If there are errors or things that need to
be addressed, it's easier to address them
before you have found a house, than after
you have found a house and are trying to close
your loan.
If you know that there are a few blemishes
on your credit, let your lender know what
they are, why they are there, and why you
are a still good credit risk. Lenders look
at your credit to determine how likely you
will pay back the loan. If you had extenuating
circumstances - like a loss of a job or medical
bills - let them know so that they understand
that it is not likely to happen again in the
future.
2. Get approved before you buy.
An approval means that a lender has reviewed
your credit history, verified your assets
and employment, and has approved your loan
before you have found a home to purchase.
As long as the home appraises for at least
the purchase price, the loan should close.
Getting approved also gives you an advantage
over other buyers. Your firm approval makes
it easier for you to negotiate on the price
of a home, than a person who is not approved
or is pre-qualified.
While getting pre-qualified may sound official,
it is really just getting an idea of what
you can afford. Its
having a person plug in a few numbers that
you give them - your monthly income and your
monthly debt - and getting an approximate
payment calculated. From the payment, the
calculator can approximate the house price
range that you can afford. No information
is verified. Because your assets, income or
credit is not verified, a pre-qualification
has little value when purchasing a home.
3. Find a great buyer's agent.
Traditionally real estate agents represent
the sellers in a transaction. When you are
not working with a buyer's agent, they are
less likely to negotiate the best price or
contingencies for you.
A buyer's agent's job and fiduciary responsibility
(meaning legal duty) is to you, the buyer.
Before working with an agent, establish if
they are a buyer's agent or a seller's agent.
After spending a lot of time with a Realtor,
it's natural to feel like you're a team. But
if they are not negotiating for you, then
they are not on your team.
4. Learn about the neighborhood.
Often times the house you find may be in a
neighborhood that you're not familiar with,
which is ok. It just means that you'll have
to do a little more research. If you find
a house that you like, ask for a list of the
neighborhood properties that sold in the last
year. How does your home rank? Is it at the
top of the price range? If so, it might be
hard to resell. Is it average or on the low
end? If so, great - as the other home prices
go up in value, they will pull your home's
value up as well.
Check out the schools - are they sought after?
A good school district means your neighborhood
will always be valued by families
which is a great reassurance to purchase,
not to mention the value-add if you have school-age
children.
Next, contact the police station and obtain
crime statistics? Are they acceptable to you?
Sometimes, if they won't give them to you,
it could be a cause for alarm.
Talk to the neighbors. The more people you
talk to, the better sense you will get of
who makes up the neighborhood and how they
will effect your time spent in it.
Check out the location of the shopping, police
and fire stations, schools, and air traffic
overhead. These are all things that might
affect your property value or quality of your
life.
5. Protect Yourself.
Ask your Realtor for a copy of the documents
you will be asked to sign if you decide to
buy the house. Read them ahead of time so
that you'll understand the questions that
you will be asked, the things you need to
know, and the decisions you will need to make.
6.) Have reasonable expectations.
There is a lot of money at stake. No house
is perfect. Understanding and remembering
these two statements will help diffuse the
negotiation stage, the inspection stage and
the closing stage.
Emotions are high for both buyers and sellers.
- The seller may have loving memories and
years of sweat equity in the house. Maybe
they are being relocated and don't want to
go. Understanding their motivations for selling
will help you appreciate their situation and
predicament during these emotional times.
There is a lot of money at stake for all the
parties involved (and that includes the realtors)
- Just remember that market value (the value
of a home) is the price that a willing buyer
and a willing seller can agree to. If you
can not agree on a price, ask yourself: Is
there something you missed? Are there comparables
that support the price that they want? Are
there motivations that might factor into the
price they are demanding? In the end, does
it matter? What is the house worth to you
today and what do you think you can reasonably
sell it for based on the amount of time you
plan to spend in it? Think about the answers
to those questions before you make your move.
No house is perfect - Always get an inspection.
It might be a few hundred dollars, but it's
worth it. It's the inspector's job to find
any problems with the house that could cost
you thousands to repair down the road. Some
inspectors have a tendency to over play the
importance of their role and the items that
they find. Get objective opinions that you
trust before making a decision on an inspection
report. Likewise, if an inspector says a foundation
is cracked but its nothing to worry about
- get a second opinion. Ask a handyman for
an idea of how much repairs will cost and
how complicated they are. The home buying
process is an emotional, complex and time-consuming
process, but it is worth it. Nothing compares
to owning your own home in a neighborhood
that you chose.
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