Are you thinking on becoming a homeowner?
Are you thinking on becoming a homeowner? Buying a home is a HUGE step in our lives and we know it can be an overwhelming and difficult process. We want to share some tips we think can help you to make a smart and informed decision:
- Save: Before buying a home, make sure you know exactly what you’re getting into, so you can decide if you’re financially and personally ready for such a large commitment. In addition to your monthly mortgage payment, figure out how much you’ll be paying for property taxes, homeowner’s insurance, HOA fees and other monthly costs of owning a home. Here’s a tool that can help calculate them: http://www.bankrate.com/calculators.aspx. It is also important that you know that a down payment is never a bad investment. Putting some money down is a good idea for any homebuyer because it minimizes your risk and lets you start off with some equity.
- Improve Credit Score: Higher credit score means lower interest rate, so take some time educating yourself on how to improve your credit score. Start by staying current with your bills (get them under control); avoid doing major purchases with your credit cards (including furniture – wait until you secured your interest rate); don’t cancel any credit cards, since that negatively impacts the credit score; keep your credit cards balances under 30% of the credit limit.
- Find smart money and get pre approve: Did you know that you can get a loan through a non-profit organizations that have agreements with several lenders to give first time homebuyers affordable loans? Opportunities like this exists, you just have to look for them. Remember, you still have to be underwritten by the lenders, so be prepared to show your credit history and attend classes and workshops the non-profit group organizes.
- Decide what you want: Before shopping for a home, you should set your priorities and decide what is more important to you. Specially, decide which one you prefer most: space or location. If you settle on this in advance, you can make thought-out decisions during the home-buying process and avoid the unsettling feeling of buyer’s remorse. Also take in count that even if you don’t have kids, it pays to check out a neighborhood’s school district before buying a home, as living in an area with a sought-after school system raises your property value. We share with you a wish-list that can help you identify your preferences: https://hud.gov/buying/wishlist.pdf
- Choose a Realtor: A Realtor can help you make educated decisions and help with the negotiations when buying a home. Remember Realtors have access to much more information that what you can find in great websites like Zillow.com or similar. 80% of the home sales occur in systems that only Realtors have access to. We have great Realtors in our team and we can assist you with this.
- Visit homes and narrow choices: When you visit a home, take pictures and make notes of what you like and didn’t like about the property. When you visit several homes, you won’t remember key things of each home, unless you take notes. Then, visit neighborhoods during day and night to gauge traffic, noise, etc… test commute and consider resale value.
- Check building plans for the neighborhood: Find out if there are any building plans near your home to avoid surprises after you’ve moved in.
- Make an Offer: It is important to make strong offers when you find your ideal home. For this reason, looking for homes at the top of your price range can have a negative impact, if you then plan to make lowball offers. Also, be careful when asking sellers to contribute to their down payment and closing costs. A lowball offer and asking the seller to contribute, will make your offer weak and might be rejected, outbid or ignored every time. If you find yourself incurring multiple losing bids, a change in strategy is in order. By giving a little bit, you can get a lot in return.
- Dig deeper during inspection: It is highly recommended to ask for an inspection, once you have a home under contract. If a problem pops up during your inspection, it’s always a good idea to take a closer look and dig into it. The price for an inspection ranges from $280 to $500; it is a small price to pay to make sure you are not buying a big problem.
- Continue negotiating after the inspection: You have the right to cancel the contract or modify the offer accordingly during your inspection period, so, if a flaw is discovered during your home inspection, use it to your advantage. You might have another chance to get a great deal if a flaw is found. Staying under budget when buying a home gives you extra cash to do the repairs yourself and/or add the upgrades and decor you’ve always wanted.
- Read HOA (Homeowner Association) documents before closing: Reading a big stack of papers may seem like a huge hassle, but carefully reviewing your HOA documents is important if you want to avoid unpleasant surprises down the road.Before buying a home in a community with an HOA, read through the covenants, conditions and restrictions (CC&Rs), bylaws and budget and look for anything that could affect you in the future. Also, talk to residents in the neighborhood and get opinions on how well the HOA does its job.