The Top 10 Thing to Know Before You Buy A House

The purchase of your first home will be one of the scariest and exciting things you will ever do.

It is stressful because you are entering unchartered waters.  Everyone worries about paying the mortgage every month, and if they are ready to handle the purchase of a home.  If you have done your research the easier the entire process will be.  The more you know, the better off you will be.  Buying a house is one of those huge milestones that most people look forward to.  It can also be one of the most stressful things you will ever do.  Be informed!! Take your time and do not rush the process.  Here are the top 10 items you should do to make this process less stressful and much more exciting:

  1. Know you credit score – This is where you should start.  If you credit score is low now is the time to work on paying off any old debts and try to pay down any credit cards or student loans that have been lingering.  The higher your score is the better rate you will get on your mortgage.
  2. Get a pre-approval on a mortgage – Once your credit is all clear, now you can shop for a mortgage.  There are several different types of loans that are available.  You need to go over all of these with your lender.  FHA only requires 3 ½% down, but you will pay monthly mip added into your payment.  If you can put down 20% on the down payment a conventional loan may be a better choice for you.  You will not be required to pay any private mortgage insurance, and this will help keep your mortgage payment lower.
  3. Savings – make sure you have enough money saved to cover all the expenses that come with purchasing a home.  You will need the down payment and closing cost.  Those fees vary from state to state and your lender can go over those fees with you.  You will also need to have an inspection done and purchase homeowner’s insurance.  These fees can add up quickly and you want to make sure you are aware of every expense.
  4. Find a skilled realtor – Finding a realtor you are comfortable with is very important.  This is the person that is going to help you find the home you will be buying and living in.  You need to trust the realtor you are working with.  Ask your friends and family who they used.  You may find one name keeps coming up.  Also interview realtors so you find the person right for you.
  5. Research property values in your area – You need to know what the price of homes are currently selling for in your area.  You do not want to tell a realtor that you only want to spend 200k, and then you find homes in your area start at 400k.  If you know the values and prices of homes, you will be able to give your agent a clearer idea of what you are looking for.  This will also keep you from being disappointed on what you can afford.
  6. Verify the listing – Now you have found a home and want to put an offer in. Make sure you verify the information on the listing.  Make sure the taxes are correct.  Sometimes the owners may have a discount on their taxes that you may not qualify for.  This is important because it will make your monthly expenses higher.  Also, you want to confirm that all the required certificate of occupancy are correct and there are no open permits.
  7. Put your best offer in – In today’s market the inventory is very low, so you will most likely be competing with several people for the same home.  You need to be prepared that you can lose the home to a higher bidder.  Make sure you are putting in a fair offer and your best offer.  Now is not the time to low ball your offer.  You will risk being out bid and most likely will not get a counteroffer.  This market today is too competitive to play games.  Be direct in what you are willing to pay for that home. 
  8. Get an inspection – After your offer is accepted, make sure your find a reputable inspector to inspect the home.  You want to make sure you are not purchasing a home that needs a roof and a new heating system, etc.  There are always things a home will need but if there are large repairs needed you can negotiate with the seller on what you want  fixed before closing.  Sometimes if the project is too big for the seller to handle you can negotiate the purchase price and take on the repair yourself.
  9. Do not make any large purchases at this time – Once you are in contract you will be dealing with your lender on finishing the mortgage.  Now is not the time to be buying a new car or a new labtop and using your credit cards.  A large purchase can affect your debt-to-income ratio and prevent the loan from being able to close.  Save those purchase for after the   closing.
  10. Set the closing –  I recommend using an attorney but again every state is different.  Some states do not require having an attorney, but others do.  It is always smart to have an attorney over seeing your purchase.  They do this every day and know all the ins and outs of real estate.  You do not want to miss something and make a bad decision. 

     Now that you have purchased your home, enjoy it!!  IF you follow these steps you will have purchased a home you can afford, and the purchase process will not have been so stressful because you were prepared every step of the way.  And now you are one of the people who has succeeded in enjoying home ownership.

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