10 Guidelines for the Home Buying Process
Are you looking to buy a new home? Whether you’re a first-time buyer or getting ready for retirement, there are many mistakes and pitfalls that you need to watch out for. This list of 10 guidelines for the home-buying process will help start you out on the right track and keep you from losing your hard-earned savings to easily avoidable mistakes and unscrupulous sellers.
- Set a budget and stick to it: This may seem like common sense, but it’s also one of the most common and most damaging mistakes that home buyers make. Most lending companies will require a minimum of 10 to 25 percent down payment before they will even consider lending you money, so if you’re planning to buy in the next few years, start saving now. It’s also a good idea to use a lending calculator (there are many free ones available online), which will allow you to input your financial details, help you calculate precisely how much you can afford, and help you determine your ideal price range.
- Make a list of what is important to you: Don’t let a real estate agent decide what the “perfect house” for your family is — go to them with a list of your priorities and let them find you the houses that are available based on that list. Do you have kids? Put a high quality school system near the top of your list. Ready to retire to a life of peace and quiet? You’re probably not going to want a large public park or bar district just down the street. Going into the process with a predefined list of criteria will save you a lot of time by avoiding trips to the houses that you’re going to eliminate immediately anyway.
- Visit neighborhoods that you think you might be interested in: While working on your list of prerequisites, go for a nice Sunday drive through the neighborhoods that you could consider moving to. The internet is a great place to start your search but it simply can’t replicate the feeling you can get for a place by actually visiting it.
- Don’t be afraid to negotiate: In today’s market, many people are under extreme pressure to unload their houses — use this to your advantage. If you fall in love with a house, but it’s more than you can afford to spend, make an offer that is within your budget. The worst that can happen is that you get turned down, but you’ll never know if you don’t try — they may be willing to meet your terms.
- Use the current financial climate to your advantage: The current housing market is one of the strongest buyer’s markets in history. The market is flooded with foreclosures and short sales and that means you can get a lot more house for your money than you could have just a few years ago.
- Use technology to your advantage: As mentioned above, the internet is a great place to start your search for the home of your dreams. Many realtors and real estate experts now have blogs and websites to help you find the current trends in the home market and help you find the agent who is perfect for you. You can also find out preciously valuable information, such as what the house you’re looking at sold for previously, tax rates, neighborhood reviews, and so much more.
- Find the perfect agent for you: You’re going to be working very closely with the person to make one of the biggest decisions of your life — make sure you find someone you feel you can trust and has your best interests as their foremost concern. If you start out with an agent, and then realize that they aren’t what they first seemed, don’t waste your time, cut ties immediately, and find someone who will work to find the best house possible for your family.
- Find a good inspector: Home inspectors are a dime a dozen these days, but they’re not all equal. Do your research online and talk to your agent to make sure the person inspecting the house is the best you can get. If a subpar inspector tells you the house is good and it turns out to have serious problems down the road, you can be out many thousands of dollars or worse.
- Find the perfect lender: Your agent should be a big help in this area — they can provide you with a list of well-regarded lenders in the area who can help you make sure you’re getting the best possible deal. Recent legislation in the wake of the subprime loan crisis has eliminated many of the low quality lenders from the market. But they’re still out there, so make sure you get your loan from a reputable source and compare lenders to make sure you’re getting the best terms.
- Remain logical — don’t get emotionally attached: We saved this for last because it’s the hardest yet possibly the most important item on this list. Do not allow yourself to become emotionally attached to the houses you’re looking at. This is the easiest way to blow your budget and end up in a very bad situation if tragedy should strike and you lose your income stream down the road.