25 Handy Tips to Help You Buy Your Next Home
Buying a home, whether it’s your first or you’ve already owned several properties in the past, can be an exciting process. It can also, however, be a process that comes with a great deal of stress and anxiety. More often than not, a homebuyer’s stress level is directly related to their understanding of all that is involved in buying a home. The more you know, and the better you understand what’s going on, the less anxious you’ll feel about the entire ordeal.
In many cases, the services of a licensed real estate agent can be invaluable for many reasons, least of which is the fact that they make it their business to know the housing business. This means they can walk you through most of the process in a masterful and effortless way. If, however, you are attempting to buy a home on your own, or you’d simply like to educate yourself more about the buyer’s side of the housing market before securing the services of an agent, this guide will be a useful tool for you.
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The Financial Side of Things
Financial aspects of buying a home are those that home shoppers think of first and most often. Dealing with the maze of financial issues doesn’t need to be unbearable, however, if you follow these tips:
- Start planning financially for a home purchase at least a year in advance. This will allow you to take a proactive stance in ensuring that your credit is in good shape. You should avoid making any large purchases during the year prior to your home purchase, and also avoid opening any new lines of credit or extending existing ones unless it’s unavoidable.
- Anticipate a down payment of 20 percent and start saving as early as possible. You can sometimes find lenders who will require less, but 20 percent is often the standard down payment for a mortgage loan. When you determine how much you are willing to pay for a house, you can then calculate what your down payment needs to be and start budgeting to put that money aside for the purchase.
- Get your financial paperwork in order so you can have it ready for the lender when you start the pre-approval process. Lenders often ask for paycheck stubs, bank statements, W-2s, and tax returns; they want a sufficient amount of documentation to establish a financial history. You should have on-hand your tax returns for the past three to five years, and paycheck stubs and bank statements for at least the past year or longer.
- Get pre-approved for a home loan before you start house shopping. You don’t want to have your heart set on that two-story brick Colonial on a cul-de-sac in the perfect suburban neighborhood, only to find you can’t qualify for a loan that matches the price tag. Loan pre-approval lets you know, after various lenders have examined your credit worthiness, exactly how much you will be able to afford. Keep in mind that being pre-qualified is not the same as being pre-approved; everyone is pre-qualified, but you can only get pre-approved after you’ve submitted your personal financial data to a lender who will evaluate your information and determine how much they can offer you for a mortgage.
- Once you have been pre-approved, determine how much you are willing to spend. Just because a lender will give you a $500,000 mortgage doesn’t necessarily mean you can afford to make the payments each month. Set a price range that you feel comfortable with and stick to it, regardless of how much purchasing power you are approved for.
- Don’t take the first home loan you are offered. Take your time and shop around for a loan that provides you with the lowest costs and fees, and an interest rate that is competitive.
- When you are looking at the sales price of a home you are interested in and you think you can afford, keep in mind that your mortgage payments aren’t the only costs associated with buying or owning a home. You will also have property taxes, homeowners’ insurance, maintenance and repairs, utility expenses, homeowners’ association fees, and other costs that quickly pile up and become unmanageable if you don’t properly anticipate them.
Evaluating the Real Estate Market
Some people believe that the real estate market can be predicted accurately. Unfortunately, making predictions on the real estate market is often like predicting the weather. You simply hope your educated guesses are correct and take a learned leap of faith. Here are some tips to help you evaluate the market and make the best choices for you and your family.
- There is no ideal time to buy a house, no matter what people may say. In some areas, there is some seasonal fluctuation with housing prices simply because of the temporary influx of visitors, but the market itself is always going up and down. The best time to buy a home is when you’ve found that house you simply cannot live without.
- When you have found a home you like in a particular neighborhood, check out the prices of similar homes in the same area to determine whether or not the house you’re interested in is overpriced or priced just right. Barring any extraordinary upgrades, like a self-cleaning infinity pool, heated driveway, fully digitized and voice-activated home control system, or an underground lair beneath the property, housing prices throughout a general area should be comparable to each other.
Evaluating the “Perfect” Home and Property
A continuation of the previous section, these few tips further your search to find the ideal home and neighborhood. When you are armed with as much information about a property as possible, it makes your decision-making process more simple.
- If there isn’t a recent land survey on file at the county offices where your desired home is located, have a surveyor perform one. This will let you know where your property lines are, which is useful information to have in the event of property disputes (“your tree is in my yard” or “half that fence belongs to me”) or when property taxes are due.
- Bigger isn’t always better. A larger home often comes with larger issues. Also, bigger homes have bigger price tags, and property values rarely go up enough to give you a resale edge, so choose a home that is the “right” size for your family’s needs.
- Be objective. Even if you absolutely love the scarlet begonias bordering the driveway, or the diamond-shaped fire pit in the backyard, don’t make your buying decision based on your emotional pull toward a home. Evaluate it logically and analytically, and do your best to choose a home that meets all your needs. You can always plant begonias and build a fire pit after you’ve bought the best house for your family.
- Even if the house is new, have a certified home inspector give it a thorough examination before you decide it’s the right house for you. Some homes have hidden issues that don’t reveal themselves until after you’ve signed on the dotted line. A home inspector can often detect these issues beforehand, saving you the headache of dealing with the perfect-home-turned-money-pit. If you have already created a short-short list of potential homes, you might be able to negotiate the cost of a home inspection into the seller’s side of the arrangement.
- Spend time in the neighborhood at different times of day. Is it a neighborhood that you feel comfortable in, no matter what time you are out and about? Or does the young couple several doors down throw parties every weekend, or perhaps the children across the street engage in a loud and disruptive game of street hockey every afternoon? Is the neighborhood near local amenities like the grocery store, your workplace, K-12 schools for your children, dining venues, entertainment locations, parks, or other spots you visit on a regular basis? Just as much as you might love the house, you have to love the neighborhood too.
- Create a checklist of qualities you want to find in your new home and your new neighborhood, and prioritize the list according to what items are negligible but desired, what items are almost “have-to-have,” and what items you absolutely cannot live without or compromise on.
- Many real estate agents professionally “stage” a house to make it look lived in, comfortable, and attractive. This includes the placement of various furnishings and décor to fill the rooms and cover bare walls or built-in shelves. When you inspect the interior of a home, strip away the staging and mentally insert your own furnishings, décor, or future purchases.
Other Things to Consider
Before you are ready to start examining contracts and making serious offers, there are a few more things to think about when you are shopping for your next home. This list of items gives you some more armor in your arsenal when it comes to determining if that “perfect” house truly is perfect for you.
- Before you start planning backyard barbecues and summer sleepovers for your children in their new home, make sure you know whether or not the house is located in a neighborhood governed by a homeowners’ association (HOA) and ask for a copy of their contract. Some HOAs are extremely restrictive — down to the color of the exterior paint and what type of flowers you can plant in your yard — while others are less prohibitive and lean more toward ensuring that everyone lives in a safe and appealing neighborhood.
- There are a large number of funding options, tax breaks, discounts, and other boons offered to home buyers, whether a first-time buyer or repeat owner. Dig thoroughly and look for as many financial breaks, credits, and options as you can find. Some examples would include funding or grants for the purchase of a home that has been substantially upgraded to be more energy efficient, or options for people who pursue specific fields of employment.
- Avoid buying a home that has an irresistible view. A house that overlooks a scenic natural wetland or one that has an unimpeded view of a pastoral valley may not have that same view in a few years. If you buy a home strictly because of the surroundings, you may soon find yourself stuck with a house you didn’t care much for in the first place — without an appealing view to make it more bearable.
- Most real estate agents work for the seller, not the buyer. You can, however, find a “buyer’s agent” that represents your interests and works for you to help you find the right home for your family. The pay scale varies for buyer’s agents, ranging from a percentage-based commission to a flat rate, so be sure to ask about that factor if it will have an impact on your decisions.
Making an Offer to Purchase
Are you ready to start thinking about putting numbers to paper and moving forward with the purchase process? Here are some helpful tips to help put you in the best position when submitting a serious offer on the next home for your family.
- Whether you are making a direct offer to purchase a home or you are bidding against other potential buyers, make sure your offer is affordable for you and reasonable for the seller. You don’t want to make an offer that will strain your finances, but you also don’t want to make one that offends the home’s current owner.
- Do some research before making an offer, and find out what the average price per square foot has been on neighboring properties or those with similar characteristics as the one you are hoping to buy. An opening offer based on the square footage (livable space) of the home is a reasonable starting point.
- Take into consideration the neighboring properties and the neighborhood as a whole when you make an offer to purchase a home. Does the neighborhood lie in a flood plain? Is the adjacent homeowner planning to turn his front lawn into a putting green? Things that will detract from your home’s curb appeal and value are negotiating points when you are ready to make an offer.
- Read every paragraph and page of any contract, agreement, or document you are asked to sign, before you sign it. If you don’t understand what something means, ask, and if you don’t fully comprehend the terminology, terms, or conditions, continue to withhold your signature until any murky aspects of the paperwork have been thoroughly explained in detail.
- If you are positive you’ve found the perfect home, all your financial strings are neatly tied together, and you have the down payment on-hand, make your move as soon as possible. You don’t want to spend a couple of weeks reaching a decision to buy, only to find out you are now second, third, or fourth in line behind other potential buyers. A seller wants to offload the property as quickly and completely as possible so they can secure the funds from the sale to spend as they wish. Don’t make them wait if they don’t have to.
When you move ahead into the home-buying process with these tips in mind, you will do with less stress and better prepared to handle the process from start to finish. Buying a home, whether it’s new or “new to you,” should not only be one of the biggest investments you’ll make in your life, but also one of the more enjoyable activities too.