4 Tips Before Buying A Home

When buying a home, one of the most important things you can do is to plan ahead. Failing to plan for small daily tasks is one thing, but failing to plan for one of the biggest purchases in your life can lead to severe problems. It is arguably the worst thing you could do before buying a home. You owe it to yourself and your family to get ready in advance for the home buying process. Here are four tips that can help you do this:

tips before buying a home1. Educate Yourself

It’s important for first-time buyers to become familiar with the basic home buying process. Even if it isn’t your first time, it’s still a good idea. The lending and real estate markets have changed quite a bit from even just a few years ago.

Here are four things you should look into:

  • What type of mortgage loan best suits your needs: Conventional, FHA, or VA?
  • Should you get a fixed-rate or adjustable-rate mortgage (ARM)? 
  • What’s the real estate market like in your local area? Are homes selling quickly with multiple offers on the first day, or are they sitting on the market?
  • What is the maximum monthly payment you can make comfortably? This is something your lender can help with.

This is also a good time to check your credit score and reports (you can get free annual copies). You should see what your credit situation is, and come up with a plan to improve it, if needed. You can see 2 of your credit scores every month on Credit.com.

You can avoid many surprises by determining the answer to these questions before starting your new home search.

2. Select a Lender & Real Estate Agent

You will be working with your loan officer and real estate agent throughout the entire home buying process. You will spend many hours with them in person and on the phone. Search through reviews and talk with several agents and lenders to find the ones that will provide you the best customer service and a quality buying experience.

When interviewing lenders, keep these questions in mind:

  • Who will be your point of contact throughout the process?
  • What is their average closing time for a loan?
  • Do they have a good Better Business Bureau (BBB) rating?
  • If you are obtaining a specialty loan such as a VA mortgage, are they familiar with its requirements and how it works?

When interviewing real estate agents, keep these questions in mind:

  • What’s their overall availability? Does it match yours?
  • How long have they been working in your particular market?
  • Do they have experience working with specialized loan products such as FHA financing?
  • Do they understand what homes will or will not meet these requirements?
  • Will you be able to put your full faith and trust in them?

3. List Your Wants & Needs

Going into the home buying process knowing your needs and wants will benefit you in many ways. Doing so will help you identify and prioritize features and help you eliminate homes that simply don’t meet your needs.

As you begin shopping for a home, it may be necessary to re-evaluate your list based on the local market and what is available in your price range.

Lean on your real estate agent for advice when you’re unsure of whether your list meshes with your budget.

4. Save!

Your out-of-pocket costs will vary depending on a number of factors, including the type of mortgage and your contract negotiations. These fees typically include a down payment and closing costs.

Closing costs can vary greatly depending on your lender and the amount of your mortgage. In California, 2% can be a general guideline to start. Ask your lender and real estate agent for estimates on closing costs.

Down payments are calculated by taking a percentage of the loan amount. They require that the borrower/buyer put a designated percentage in cash toward the home purchase. These percentages vary by loan type. Conventional loans require 5 – 20% down on a home. FHA loans require 3.5% down. VA  loans don’t normally have a down payment requirement.

Calculate the estimated out-of-pocket costs. Start saving toward this goal, if you haven’t already. It will be due upon closing. You shouldn’t be emptying your savings to come up with your closing costs and down payment. Some lenders will even prohibit this practice. You’ll want these savings as a safety net as a new homeowner. Leave yourself a comfortable amount of cushion in savings for emergencies and upcoming household expenses.

For more information on this topic:

619.384.2248
Ryan@RyanYourRealtor.com
Visit my Website: http://ryanyourrealtor.com

 

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5 Responses to “4 Tips Before Buying A Home”

  1. […] single best way to stretch your budget and find the home of your dreams, is to find the right home in the right neighborhood that needs […]

  2. I like what this article recommends about listening to what you think you’ll need and want. It makes sense that it could be good to pay attention to these things because settling for less than I want isn’t something that would be good. It’s something to keep in mind when looking at homes because I’d really like to have a yard and garden to take care of.

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