Buying a house would be easier if all you had to do was pick one. Unfortunately it does not work that way and fortunately for the buyer there are steps they can take to make house buying a pleasant experience.
Determine if you are ready to buy a house:
Have a steady income-If you only work seasonally or your job is at jeopardy because of lay offs you might be best waiting until your circumstances are better.
A good credit history-This will not only determine your chances of obtaining a loan but also how much interest you will pay.
Outstanding debt-The fewer the better. If you have quite a few now is the time to begin a plan to reduce them.
Money for down payment-Consider that you will need at least 20% of the purchase price. Some programs are available to help with down payments.
Ability to pay mortgage and other costs-Make sure your income is sufficient.
Pre-approval for loan:
The lender will pull your credit report, check your debt to income ratio and will do an thorough analysis of your financial situation. The importance of being pre-approved is not only knowing what you can afford, but will also give the seller more incentive to accept your offer and more apt to end in a sale.
If your credit report or credit score is not good enough to get you pre-approved the lender may have suggestions on how to better your chances.
Consider other costs:
Property tax and insurance, the down payment or private mortgage insurance and closing costs all factor into the price of the house you buy. Knowing what you will be paying prepares you and helps determine what you can afford each month. Expecting to pay a certain amount then having the shock of finding you will have to pay more can be avoided when you have a clear picture of the true cost.
Finding your house:
Be realistic about the price. Keep in mind what you need compared to what you want. The amount of bedrooms, a fenced in yard for pets and a good school district can be needs, while a finished basement, screened in porch and wood floors are wants. Prioritize to determine what you can do without.
What kind of house you want or need. A single person needs less room so a condo might be the best option. A family of four needing more room would be better off looking for a single family home, townhouse or duplex. If your income predicts, in some communities you can find co-ops where the selling price is much lower and you only pay monthly fees to cover maintenance.
Questions to consider when looking at a house:
1. Is there enough room? Can you expand if you want to?
2. Are there enough bedrooms and bathrooms?
3. Is the house structurally sound?
4.Do the mechanical system and appliances work?
5. Is the yard big enough?
6. Are you happy with the floor plan?
7. Will your furniture fit?
8. What repairs are needed?
9. Is the seller willing to do repairs?
10. Will you be happy year round in the house?
The importance of location:
You are not only buying a house, you are gaining neighbors. Buying the perfect house then finding out you moved next door to the neighbor from hell can be a house buyer’s worst nightmare.
Look at what’s nearby. Schools, parks, shops and other amenities you may want to take advantage of.
The tax rate and homeowner association fees.
The restrictions of the area. Some areas do not allow fences or expanding a house. Some even dictate what color you can paint your house.
Real Estate agent or Buyer’s agent deciding which one is best for you as the buyer:
The real estate agent works strictly for the seller. Their job is to get the most money and best deal for the seller.
The buyer’s agent works for the buyer and will negotiate for the best price. Even so, there are different types of buyer’s agents.
Exclusive-They only work with buyers
Single Agency-They have listings and serve both sellers and buyers.
Buyer Agent-Have listings, work with buyers under contract and can declare dual agency when the buyer wants to purchase a property being handled by the agency.
Bidding on the house:
A contract becomes legally binding once it is accepted. Make sure it covers everything. Just because there is a refrigerator and stove in the kitchen does not mean they are included in the purchase. If you want them or other items in the house you must state so.
Offer the purchase price and the amount of earnest you are willing to put down.
The home inspection should state what you consider acceptable in the inspection report.
Financing occurrences to get the mortgage you want with interest rates and terms. If you want the seller to pay closing costs, etc. it must be stated.
A time line that gives the seller a deadline to respond.
The seller may counter the offer with a different price and terms. Remember, until the contract is accepted and signed anyone can come in and make an offer. If a buyer comes along willing to pay the asking price the seller has the right to accept the offer.
So are you ready to be a home owner? Doing your homework and researching as much as you can will provide you with the information you need to determine if and when it is time for you to begin searching for your first house.