Find an Experienced Real Estate Agent…like Amy Sims
Your first step in purchasing a home should be to find a real estate agent who can answer your questions and is knowledgeable about your desired neighborhood and the type of home you want to buy. Don’t be afraid to talk to more than one agent to find the person who is the best fit for your needs in order for you to buy a home. While it’s a good idea to get references from friends and family, make your own decision based on questions you have for the agent.
Tips to Make Buying a Home Easier
A common theme for buyers, especially those who are purchasing their first home, is to say after the fact, “If I’d only known then, what I know now.” No matter how much factual research a buyer does, they can miss out on valuable information unless they have the opportunity to learn from previous buyers. Those special tips and tricks may not be in a home buyer’s guide, but they can make the process less painful and frustrating.
Ask buyers who have now become homeowners what they wish someone had told them about purchasing a home, and they’ll give you various answers. Some of these answers have been compiled into the following power point presentation to give you the edge when you begin the process.
Understanding Pre-approval
Before you start shopping for a home loan, you should find a lender and get pre-approved for a loan. You must provide information about your debts and assets, as well as your income to the lender. Then, the lender will tell you how much you qualify for. The maximum loan amount lets you know what price range you can look in for your home. Of course, you may not feel comfortable at the top of your price range. You can look at houses under this price range, but don’t go over.
A buyer with a pre-approval letter has a much better chance of getting an offer accepted. Sellers feel more confident working with a buyer who has already done their homework. If you’re shopping for a home in a seller’s market where other buyers will be competing with you, getting pre-approved is essential to getting the home you want.
The Basics of the Loan Process
While numerous steps exist in the home-buying process, it helps buyers if they are aware of the basic process. Assuming you have been pre-approved for a mortgage, here is what the process will look like:
- View homes and tour open houses until you find a home you want
- Put in an offer on the home
- Once the seller accepts the offer, you are under contract
- A home inspection is ordered to ensure the property is sound
- The buyer reviews the inspection report and requests any repairs they want
- The lender orders an appraisal for the property
- The lender requests any additional information from the buyer
- A title search is conducted to ensure the home can be legally sold
- The file is sent to underwriting for approval based on the type of loan chosen
- A closing date is set for loan documents to be signed
Many of these tasks take place at the same time, and they often involve multiple steps. It’s a good idea to talk with your lender and real estate agent and ask questions about anything you don’t understand.
Types of Loans Available
When you decide to purchase a home, you’ll discover multiple loan products available. Some are designed exclusively for first-time buyers, such as the FHA loan. Others, such as the VA loan for veterans and USA loans for rural properties, are designed for specific groups or situations. A traditional loan is one the lender provides that meets the standard requirements. A non-traditional loan is one such as FHA or VA, which is backed by the government.
Fixed vs. Adjustable Rate
Loans are also categorized by the interest terms. A fixed rate loan keeps the same interest rate for the duration of the loan unless the person choose to refinance. An adjustable rate loan sets a specific rate, which is often lower than a fixed rate in the beginning, for a certain time period. At the end of that time, the rate will adjust to a new rate. This can happen once or multiple times over the life of the loan. The rate may adjust up or down, depending on current rates.
Loan products may also be differentiated by the length of the term. The most popular loan is the 30-year loan, but other terms also exist. Another well-known loan is the 15-year fixed rate loan. In addition to these two, many other loan products are available with various terms and requirements.
Choosing a Loan Product
Not all lenders offer every loan product. It’s a good idea to do some preliminary research on your own to determine which types of loans are the best fit for your needs. Then, discuss the particular requirements with a lender. They can give you an idea of the difference in monthly payments between the products as well as the total overall cost.
What to Consider When Shopping for a Home
When you’re looking at homes, you’ll have a lot to consider besides price. It’s a good idea to prioritize your requirements before you start touring properties so you know what is most important and which points are negotiable.
One of the most common factors in choosing a home is location. You may want a specific neighborhood or you may be more concerned about the distance for commuting to work. The schools in an area may also be a primary concern if you have children or plan to start a family in the future.
Amenities near your home may be another consideration. Maybe you’re looking for an apartment near the nightlife or you may prefer a home in the suburbs away from businesses. A park within walking distance may sway you to one property over another.
Make a List
Make a list of everything you want in a home, and rank the items in order of importance. Decide which of the top few items are non-negotiable, which are your core requirements for your new home. When selecting these items, focus on ones you can’t add or change at a later date, such as the location. Other features, such as the wall color, can easily be altered.
Work with Your Agent
Show your list to your agent, and let them help you decide what is reasonable to expect in your price range. They can show you properties that meet some of your requirements, allowing you to decide what you’re willing to give up.
Your agent can also provide a reality check if what you want just isn’t possible for what you can pay. Listen with an open mind because your agent can help you find the home you need even if it’s not exactly what you want.
Remember that you can always make changes to your property once you own it and save money. You can also sell later on when you can afford to buy something in a higher price range. One of the most difficult tasks for buyers, especially first-time buyers, is differentiating between what they need and what they want.
Treat Buying a Home Like an Investment
It’s easy to get caught up in the emotional appeal of one home over another, but you have to remember this is a financial investment for your future. You have to be practical about your options when buying a home. Look for properties that will increase in value and yield you a profit when you decide to sell.
Consider the neighborhood as well as the house to ensure you’re making a smart move. An up-and-coming neighborhood will provide a much better return on your investment than one that is run-down and fading away.
One of the reasons it’s important to work with a real estate agent when purchasing a home is because they will be objective and steer you in the right direction. They can advise you against making a big mistake and ensure you’re happy with your decision for the long term. Don’t underestimate the value of an experienced agent when you’re purchasing a new home. Listen to their advice and ask them questions to ensure you make a good financial decision that protects you today and for the future.