Whether you have spent years saving and preparing to buy a home, or you still aren’t sure if it is something you can even dream of, the questions surrounding a first-time home purchase can feel endless.
You can find the answers – and peace of mind – by working with Penny, the industry leader in experience and service. Here are some tips to help you with the process of becoming your own landlord.
- Prequalify for a loan. Being prequalified for a loan determines how much house you can afford. It also allows you to move more swiftly when you find the right house, especially when you aren’t the only interested buyer. Click here for additional information on prequalification.
- Shop for mortgage rates and terms. A difference of even half a percentage point can make a huge difference in how much you pay over the life of a loan. For example, the difference in the monthly payment on a $100,000 mortgage at 8 percent vs. 7.5 percent is about $35 per month. Over 30 years, that’s $12,600.
- Using a buyer agent. A buyer agent is legally responsible for representing the buyer’s interest in a real estate transaction. Generally, the buyer agent is compensated by the seller at the time you purchase a new home. There are some limitations to using a buyer agent, however. Before you decide, have a Realtor explain the advantages and disadvantages of using a buyer agent.
- Features that help or hurt resale value. In some areas, a swimming pool actually detracts from a home’s value and makes the home harder to sell. In neighborhoods with two-car, attached garages, a single-car or detached garage may impact the home sale and future value. Your Realtor can point out features that hurt, as well as those that help, resale value.
- Rate the houses you tour. After touring each home, write down what you liked and didn’t like. Develop a rating system which will help you narrow the field down to the house that’s the best for you.
Tips for Buying a Home
Buying a home can be a rewarding life experience, as well as a great investment. But having a successful purchase requires some education and research. For first time homebuyers especially, you’ll save yourself a lot of frustration–and maybe even money–if you start with a few simple steps.
Know What You Need
- Be honest about your housing needs, and find a real estate agent to guide you through the process.
- Assess you finances and meet with several lenders to find the right loan.
- Research neighborhoods carefully, and make sure to have the house professionally inspected.
- Use contingencies as a negotiation tool, and don’t forget to budget for closing costs.
The first step is being honest about your needs versus your wants. For example, you may dream of having a big backyard for gardening. But if you have a busy schedule, a low-maintenance townhouse probably makes more sense. You also have to think about the long term. Will the house still meet your needs–or your family’s needs–5 years from now?
Negotiation and Contingencies
Don’t rely on price as your sole bargaining chip. Contingencies may be written into the contract to specify how certain aspects of the transaction will be handled–everything from standard contingencies like pest inspections, to contingencies for the seller to leave the drapes or pay the buyer’s closing costs. Make sure any verbal agreements are written into the contract and that you read ALL the fine print before signing. If you have questions, consult with your real estate agent or real estate attorney.
The Closing
The closing represents the completion of the sale. Be prepared to sign numerous documents as well as pay funds for loan costs, property taxes, insurance and other fees. Try and get a copy of the documents prior to the close so you can contact the settlement agent or escrow officer if any of the information seems wrong or is unclear.