A house is likely the biggest purchase you make in your life – you want to make sure you’re making the right choice! Here are 10 home-buying secrets that all buyers should know:
Secret #8: Get a Mortgage Pre-Approval BEFORE Looking at Houses
Getting pre-qualified for a loan is easy, but take the extra step and get pre-approved. Not only will this save you effort in the long run (you won’t be looking at homes you can’t afford, for example), but it gives you an opportunity to shop around a little for the best deal and interest rate BEFORE you’ve picked the home you want to buy. It also makes your eventual offer more competitive, since your pre-approval streamlines the closing process (and makes yours a “less risky” offer for a seller to accept!). To get pre-approved, your loan officer will look at all of your financial information, and will agree on a mortgage amount they are willing to lend you. Do your research when it comes to the loan’s closing costs – learn about any fees that will be charged so that you’re not surprised by any hidden loan costs at the last minute.
Secret #7: Budget for ALL Costs
If you’re currently a renter, and you’re looking to purchase your first home, don’t forget to budget for all home-ownership costs. It’s common to think of a mortgage payment relative to a rent payment, but you should also take costs like property taxes, insurance, utility increases, and homeowner association dues into consideration, as well. Also make sure that you’re prepared for repairs, maintenance, and potential increases in property taxes. Budgeting for an “all-inclusive” monthly and annual cost will help you to find a house that is affordable all-around, not just in terms of your mortgage payment.
Secret #6: Timing ISN’T Everything
Save yourself the headache – don’t worry about trying to “time the market” for the best time to buy. It’s nearly impossible to anticipate, and the best time to buy is always when you find the house of your dreams at an affordable price. Real estate is cyclical – it’s always going down and coming back up. If you’re worried about waiting for the perfect time, you’re likely to miss out. If you’re ready to buy a house, and you know how much house you can afford, then THAT is the perfect time for YOU.
Secret #5: Don’t Buy the Biggest House
While most people are naturally drawn to the biggest, most beautiful house on the block, it’s probably not the one you want to buy. Not because it’s not gorgeous, but because the largest home only appeals to a small audience – which means you’re limiting your selling potential before you even buy! Overall, your home’s value will increase relative to the other homes around it – and if you purchase a home that is more expensive that the houses around it, your appreciation will be naturally limited. Sometimes the best investment is to purchase the worst house on the block, in terms of value per square foot! Seriously, biggest isn’t always best.
Secret #4: Don’t “Fall in Love”
It’s never a good idea to let your emotions rule when it comes to purchasing a house – falling in love with something means that you’re more likely to make poor financial decisions. If you have a budget in mind, honor it! You set those limits for a reason. Make decisions based on your instincts rather than your emotions – you want to get a great house at a good value, so try to keep your emotions out of the equation and find a home that will set you up for success for a long time to come.
Secret #3: Don’t Skip the Home Inspection
While a home inspection will cost you some money up-front, it could end up saving you thousands in the long run. A home inspector’s job is to give you information about the house so that you can make a decision about whether or not to buy – you’ll get a thorough, unbiased opinion. If any issues are found in the inspection, you can ask the seller to fix the problems – or, if you prefer, you can use these issues as a bargaining tool to lower the sales price of the home.
Secret #2: Avoid Neighborly Border Wars
Get a survey done on the property – you want to know exactly what you’re buying! Not only will this help to prevent any potential disputes with your neighbors, your property tax is often based on how much property you own. You will never be sorry that you have an updated, accurate map in your possession.
Secret #1: Get to Know the Neighborhood
Before you make an offer, make sure you’re familiar with the neighborhood. The last thing you want is to think you’ve found the perfect home, only to later discover the neighborhood just isn’t for you. Drive by the house at different hours of the day to see what’s going on – if the house next door routinely plays loud music in the evenings, you want to know. Try your drive to work from the house you’re considering, and make sure it’s a commute that you can handle on a daily basis. Figure out the route to the grocery store, gas station, and other services. Look at the school district – even if you don’t have kids – as a school district can have a major impact when you want to sell (sometimes as much as a 20% difference in home value from one district to the next!). If the neighborhood doesn’t suit your lifestyle, you’ll want to know that before you buy.
Enjoy the House-Hunting Journey!
Don’t forget to relax and enjoy the adventure of finding your perfect home! This isn’t something that most people do very many times in their lives, so remember to have fun with every step of the process. You’re building your future! Make it a happy one.