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A home is probably the biggest financial
investment you will make in your life.
Before you get started, do some homework. This
handy Buyers Guide will show you some things to keep in mind as you're
hunting for that home of your dreams.
1. Determine how much you can afford
2. Shop for a home
3. Find a real estate professional
4. Research different mortgages
5. Make an offer
6. Begin contingency period
7. Buy homeowners insurance
8. Complete settlement or closing
How much house you can afford is largely dependent
on how large a mortgage basically, a home loan -- you can handle. Start
your research by using a simple mortgage calculator to see whether you
can afford to pay the monthly mortgage on the kinds of houses you hav e
in mind.
You may even apply for a mortgage at a lender before you start looking
for a home. This is called getting pre-qualified for a loan; it will
tell you exactly how much you can afford and may make the closing
process go faster.
But, remember that owning a home involves more than a monthly mortgage.
You'll also have to consider money you'll need to have at hand when you
make an offer, when you close on a home and on a monthly basis after the
home is yours.
Payments you may have to make when you submit an offer and at
closing include:
1. Determine How Much You Can Afford
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Earnest money, usually 1% to 5% of the cost of
the house, which you pay as a deposit on the house when you submit
your offer. Its your proof that you're a serious buyer down payment,
usually 10% to 20% of the cost of the house, which you must pay at
closing
-
Mortgage insurance, paid by borrowers making a
down payment of less than 20%
-
Closing costs, usually 3% to 4% of the cost of
the house, to pay for processing all the paperwork
Don't forget the day-to-day
expenses you may incur once you own that home. This includes:
2.
Shop for a Home
House hunting can be both exciting and
frustrating. Most homebuyers see roughly 15 houses before buying one.
To make the search easier and faster, nearly half of all house hunters
today begin by browsing for properties on the Internet, using web sites
like this one.
The Internet is a quick way to see whether the houses that are currently
available meet the following critical criteria: in the right location,
with the right features and at the right price. If you find after your
Internet search that few properties meet with your expectations, you may
want to readjust your criteria change the location, features, price to
increase your chances of finding a house that works for you. If you
have any difficulties in this initial search, feel free to contact me
for assistance. Homes can become available instantly and your agent is
always the most current resource for literally up to the minute new home
listing information.
Once you know what you want, where you want it and what you can afford,
its time to see the houses for yourself. To help stay focused, bring
with you a checklist of things that you've decided ahead of time are
important qualities of your future home.
This might include:
-
Is there enough room for you to grow in?
-
Is the house structurally sound?
-
Is the house in move-in condition or will it
need work?
-
Is it close enough to everyday needs, such as
grocery stores, schools, work?
-
Will you feel safe here?
-
Do the appliances that are part of the sale
work?
-
Is the yard right for your needs?
-
Do you like the floor plan?
-
Is there enough storage?
-
Will you be happy in this house in winter,
summer, spring, fall?
You
may also want to take some exterior and interior photos of each house
you visit so that you can keep track of its pros and cons.
3. Find a Real Estate Professional
While you're not
required to use a real estate professional, it is a good idea. A
professional has access to a network of contacts and can draw from
extensive market knowledge to help pinpoint the right house for you
quickly.
A professional also can help you structure your deal to save money,
explain the advantages and disadvantages of different types of mortgages
and guide you through the paperwork. And best of all, my services is at
no cost to you!
4. Research Different Mortgages
There are a variety
of mortgage types available today, each with advantages and
disadvantages depending on how long you plan to live in the home, the
financial marketplace and your income potential, among other things.
A fixed-rate mortgage is the most common. In a fixed-rate mortgage,
your interest rate and payment stay the same for the life of the loan.
An adjustable-rate mortgage usually starts out at lower interest rates
and lower monthly payments than fixed-rate mortgages, but your rate and
monthly payments may rise and fall based on a financial index.
There are also
several government mortgage programs available, including FHA mortgages,
which are designed to help people who might not otherwise qualify for a
loan.
You may also have a choice in loan terms. There are 30-year loans and
15-year loans.
Its best to talk to your real estate professional about your best
mortgage option.
5. Make an Offer
When you've found a
house you really want, its time to make the offer. How much you offer
may depend on a number of factors:
-
Is the asking price fair? Here is where the
legwork you put in while shopping for a home pays off. Decide
whether this house is priced right or out of line in the current
marketplace.
-
Is the house in good condition? Is this house
in move-in condition or will it need a lot of work? Take any costs
of improvement into consideration when deciding your offer price.
-
Has it been on the market long? Usually the
longer a house has been on the market, the more likely it is the
owner would accept a lower offer. Or maybe its just overpriced for
the market.
-
Is it a sellers or buyers market? If the
houses you're interested in are being bought as soon as they're
listed, that means you've got a lot of competition from other
buyers; offer accordingly. If houses aren't selling fast, you may
have more leverage in negotiating a lower price.
Once you've determined how much you would like to offer, work with
your real estate professional to submit the proper information.
This includes:
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A complete, legal description of the house
-
The amount of earnest money you're paying
-
The down payment and financing details
-
A proposed move-in date
-
The price your offering
-
A proposed closing date
-
The length of time your offer is valid
-
Details of the deal
This can be just the beginning of the negotiation
process. The seller has three options: accept your offer, counter your
offer or reject your offer. Let your real estate professional advise
you on the best way to present your offer for a good outcome.
6. Begin Contingency Period
When your offer has been accepted, the
contingency period begins. This is time that allows you to obtain
financing, perform inspections and satisfy any other contingencies of
your purchase agreement.
Obtaining financing might include loan approval, which will include an
appraisal of the property. Also be prepared to make your down payment,
which is usually due several days before the close of escrow.
Now is the time to schedule a professional inspection of the property;
it is one of the best safeguards you can take before buying. A home
inspector should check (and may give you a rough price for repairs on)
the electrical system, plumbing and waste disposal, the water heater,
insulation and ventilation, water source and quality, pests, foundation,
doors, windows, ceilings, walls, floors and roof.
Keep in mind that the inspector isn't there to tell you whether you're
getting a good deal. He or she is there to give you an educated opinion
on whether the house is structurally and mechanically sound and fill you
in on any repairs that are needed.
7. Buy Homeowners Insurance
A paid homeowners insurance policy is required at
closing. Often a real estate professional will help make sure your
insurance company and your title officer are working together to put
your policy in effect by the close of escrow. But, if you get your
insurance agent involved early in your home-buying process, he or she
may also help point out ways to help keep your insurance premiums lower.
8. Complete Settlement or Closing
When the property you're buying has been
inspected and you've had your final walk-through of the property to see
that all contingency conditions such as final repairs made by the seller
-- have been met, its time to face the paperwork. You will be signing
loan documents and closing papers, paying the balance of your down
payment and closing costs. This is the day you get the keys to your
new home. Congratulations! |
