Know the right process for buying a home
Now we get to the nitty-gritty. You need to follow certain steps if you want your home search and purchase to go smoothly.
Your first stop should always be the bank. There are three reasons to get a loan preapproval, if you can.
- You know what price range you can afford.
- It can give you an edge in the event there is a competing offer on a house.
- It can speed up the underwriting process once you have a purchase agreement.
- Unfortunately, many banks no longer issue preapprovals and only offer to pre-qualify a potential buyer. It's not as helpful as a preapproval but it may be the best you can do.
Agent second. Once you know how much you can afford, it is time to find your agent. It may be tempting to go it alone until you find a promising house, but a buying agent can provide an inside track on hot listings or steer you toward perfect properties not on your radar screen.
You want someone who is going to negotiate a great deal, so now is not the time to sign on with your cousin simply because she's family. Find the right agent by asking the following:
- How long have you been licensed?
- Do you work part time or full time?
- What percentage of your clients are buyers?
- How well do you know the area?
- How often will you provide me with new listings?
- Do you specialize in a certain type of property?
Then make a fair offer. OK, you've found the perfect house and are ready to make an offer. Remember that buying agent you found? This is where she earns her keep by helping you settle on an offer that isn't insulting to the seller but is still a deal for you.
Confirm with an inspection. Finally, shell out the couple hundred dollars it costs to have the house inspected by a professional. Walk through the house with the inspector if at all possible. Sure, you'll get a written report, but it is so much better to be able to ask questions and have potential problems pointed out to you in person.
Have a Plan B. And if the inspection turns up a major problem, you need to have a Plan B in mind. Your most excellent buyer agent has, of course, included a provision in the purchase agreement stating the sale is contingent on a good inspection. When an inspection finds trouble, you need to implement your second option, whether that is to back out of the agreement and retrieve your deposit or renegotiate the price with the seller.
Know what other costs are involved
Let's say you sit down with the loan application officer and learn your monthly payment will be only $750. Yes! That's cheaper than renting.
Or is it?
Having your own property is great, but homebuyers need to walk into ownership with eyes wide open. That means factoring in all the costs associated with having a place of your own. When calculating the affordability of a property, ask for estimates on the following costs:
- Lawn maintenance and/or winter snow plowing.
- Homeowners association fees.
In addition, remember that when the roof springs a leak, there is no landlord to call for a fix. Don't buy a home if you don't have an emergency fund or if you aren't able to put money aside each month in a repair and maintenance fund.
The winter months mean home sales tend to go cold, but they can be a hot time to get a low price on the house you want. Stay tuned for Stacy's video next week when he'll share a hot homebuying tip that could save you thousands.
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