1. Don't buy if you can't stay put.
If you are not sure if you
will be in one place for at least a few years, then owning is probably not for
you, at least not yet. With the transaction costs of buying and selling a home,
you may end up losing money if you sell sooner rather than later.
2. Start by knowing your credit score.
Since you likely be
getting a mortgage to buy a house, you should make sure your credit history is
as clean as possible. A few months before you even start looking at homes, you
should get a copy of your credit report. There are several companies that can
provide you with a free credit report. Be sure to only use one company and only
pull it once. Having you credit pulled frequently can alter the numbers in a
negative way. Make sure the facts are correct, and fix any problems you
discover.
3. Before house hunting, get pre-approved.
Getting pre-approved will
allow you to better understand what your purchase power is. You will save
yourself the grief of looking at houses you can't afford. The difference
between pre-qualification and pre-approval letters; pre-qualification is based
on a quick review of your finances and pre-approval is based on your actual
income, debt and credit history. You want to put yourself in the best position
to make a serious offer when you do find the right home.
4. Get professional help.
Even though buyers have
unlimited access to home listings on the Internet, most new buyers (and many
more experienced ones) are better off using a professional agent. You should
find an agent who is reliable, experienced and trustworthy and sign an
Exclusive Buyer Representation Agreement. This will ensure they have your best
interests at heart and can guide you through the process from beginning to
close. This is where you build your team of professionals to successfully help
you buy a home.
5. Purchase a home you can afford.
It is important to work
closely with your mortgage lender to determine what your purchase power is. You
can also utilize one of many calculators available online to get a better
handle on how your income, debts, and expenses affect what you can afford.
6. Understand there are many different types of loan programs.
There are a variety of
different lenders who offer different loan programs. When one lender says no,
another can say yes! There are plenty of low-interest mortgages that require
little to no down payment.
7. Buy in a town with good schools.
In most areas, this advice
applies even if you don't have school-age children. For re-sale purposes,
understand that strong school districts are a top priority for many home buyers
who do have school-age children, which boosts home property values.
8. Choose carefully between points and rate.
When picking a mortgage,
you usually have the option of paying additional points in exchange for a lower
interest rate. Points are an upfront portion of the interest that you pay at
closing. If you stay in the house for a long time, typically 3 to 5 years or
more, it's usually a better deal to pay down the rate with the points which
will save you more in the long run.
9. Do your homework before making an offer.
This is where you work
closely with your buyer agent to understand the sales trend of similar homes in
the neighborhood. So before making and offer, consider sales of similar homes
in the last 3 to 6 months. Again, your buyer agent is the expert and can guide
you with how to make a great offer.
10. Hire a home inspector.
It is imperative to have a
neutral party inspect the home to help you get familiar with all the systems of
the home and to determine the condition and quality of them. Their job will be
to point out potential problems that could require costly repairs down the
road.
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