Are You Thinking About Buying a Home? Where Do You Start?
What a huge step! Whether you’re considering moving across town or several states away, moving is a major change! When you’re starting this process, it’s best to take things one at a time and cross one bridge before worrying about the next one.
Before you jump into home shopping there are a few things you can do to help make things a bit easier. The very first thing you need to consider is your housing needs. You need to ask yourself what kind of housing you really need. You should sit down and make a list of your “must haves” and “it would be nice to haves”. The “must haves” are things that you absolutely would need in order to buy a particular property. These are things that if they weren’t in a home, you wouldn’t take that property even if they were giving it away! Take some time to really think about what it is you need and desire in your home.
Would a condo or townhouse be the best for your current needs? If you’re single, a newly married couple, or an empty nester, the answer may be yes. It may be attractive to have all of the outside maintenance taken care of, no mowing or shoveling snow. If you work a lot of hours that may be very appealing and there’s added security, especially to condo living but sometimes the resale on condos or townhouses isn’t great, so that’s something to consider.
If you determine you’d rather buy a single residence home, always consider resale value, even if you think you’ll never move again! Homes with three bedrooms and two bathrooms are usually the most desireable. Do you want a ranch, or would you be OK with a two-story? What about a story and a half? (A home is considered a story and a half if the master suite is on the main level.) Do you want an older home with character in an older neighborhood, or would you prefer a newer home? Maybe you’d like to build?
Location, location, location!!! If you don’t have kids in school, you still may want to at least consider buying a home in a desirable school district for resale purposes, even if you’re not ever going to move again! The disadvantage is that homes in a sought-after school district will probably be priced a bit higher and will probably sell more quickly, but that will be an advantage when it comes to selling it
You’ve made your list and are now ready to… speak with a lender and get a pre-approval letter. Your lender will take your personal and financial information and tell you what you can really afford to spend on your next property. You may not want to buy a home at the top end of your limit because you may be stretched too far and not have as much disposable income as you’d like. There are other costs associated with moving as well. You may need to hire a moving company or rent a moving van. Will you need to buy new appliances, window treatments, or furniture? What about the current floor covering? Will the carpet need to be professionally cleaned before you can move in?
Each real estate transaction has closing costs associated with it. Your real estate professional will be able to give you an idea of what your costs will be. When you are writing your offer, you can ask the seller to pay some of your closing costs. The government has set “allowable” amounts for this. You can no longer ask the seller to pay for all of your closing costs but you may get them to agree to pay for some of them.
Once you have your pre-approval letter, your next step is to find a real estate professional! This is someone who works for you to find you the home that best fits your needs. They set up the showing appointments to accommodate your schedule and will take you to see as many houses as you’d like until you find “the one.” If you’re the buyer, their services come to free of charge! Their commission is paid by the seller of the property you purchase. They will help guide you through the purchase agreement and the negotiations for the sale. They’ll be there to guide you through the inspection process and the negotiations that go along with that as well.
Once you get through the inspection, the next step is the closing. This appointment will take approximately an hour, and once you’ve signed your name a few hundred times, the home is yours!
While you’re searching homes,now is when you should consider asking other lenders what their closing fees are, as well as their interest rates, because they do vary company to company. You should look at mortgage companies, local banks, larger banks and credit unions. Once you’ve shopped around, you will be better able to make an educated decision about which lender fits your needs the best.
If you don’t have the typical 20% to use as a down payment for your loan, you will be asked to pay PMI (personal mortgage insurance); this will be included as part of your monthly mortgage payment. There are mortgage calculators that you can find online that will give you a good idea of what your monthly payment will be, but keep in mind that if you do use those mortgage calculators, they don’t include your homeowner’s insurance or your taxes. Your taxes can usually be calculated by using 1% of the assessed value, so just using 1% of the asking price will give you a pretty good idea.
You will want to call different insurance companies to get the best rate. You’ll get a better rate too, if you let them insure both your home and auto. This is just one more thing to keep in mind! When you’ve decided upon a lender, they’ll sit down with you and answer all of your questions regarding your future payments and what the lender fees will be for you to get your mortgage.