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Five Simple Things
You Can Do to Ensure a Smooth Home Purchase
Buying a home can be an emotional,
time-consuming, and complex process. There
are a few things that you can do to help
make the process go as smooth as possible:
1.) Check your
credit
Before you apply for a home loan, regardless
of your credit, it's a smart idea to obtain
a copy of your credit report from the three
major credit bureaus and review the
information. If there are errors or things
that need to be addressed, it's easier to
address them before you have found a house,
than after you have found a house and are
trying to close your loan.
If you know that there are a few blemishes
on your credit, let your lender know what
they are, why they are there, and why you
are a still good credit risk. Lenders look
at your credit to determine how likely you
will pay back the loan. If you had
extenuating circumstances - like a loss of a
job or medical bills - let them know so that
they understand that it is not likely to
happen again in the future.
2.) Get
approved before you buy
An approval means that a lender has reviewed
your credit history, verified your assets
and employment, and has approved your loan
before you have found a home to purchase. As
long as the home appraises for at least the
purchase price, the loan should close.
Getting approved also gives you an advantage
over other buyers. Your firm approval makes
it easier for you to negotiate on the price
of a home, than a person who is not approved
or is pre-qualified.
While getting pre-qualified may sound
official, it is really just getting an idea
of what you can afford. Its having a person
plug in a few numbers that you give them -
your monthly income and your monthly debt -
and getting an approximate payment
calculated. From the payment, the calculator
can approximate the house price range that
you can afford. No information is verified.
Because your assets, income or credit is not
verified, a pre-qualification has little
value when purchasing a home.
3.) Learn about
the neighborhood
Often times the house you find may be in a
neighborhood that you're not familiar with,
which is ok. It just means that you'll have
to do a little more research. If you find a
house that you like, ask for a list of the
neighborhood properties that sold in the
last year. How does your home rank? Is it at
the top of the price range? If so, it might
be hard to resell. Is it average or on the
low end? If so, great - as the other home
prices go up in value, they will pull your
home's value up as well.
Check out the schools - are they sought
after? A good school district means your
neighborhood will always be valued by
families which is a great reassurance to
purchase, not to mention the value-add if
you have school-age children.
Next, contact the police station and obtain
crime statistics? Are they acceptable to
you? Sometimes, if they won't give them to
you, it could be a cause for alarm.
Talk to the neighbors. The more people you
talk to, the better sense you will get of
who makes up the neighborhood and how they
will effect your time spent in it.
Check out the location of the shopping,
police and fire stations, schools, and air
traffic overhead. These are all things that
might affect your property value or quality
of your life.
4.) Protect
Yourself
Ask your Realtor for a copy of the documents
you will be asked to sign if you decide to
buy the house. Read them ahead of time so
that you'll understand the questions that
you will be asked, the things you need to
know, and the decisions you will need to
make.
5.) Have
reasonable expectations
There is a lot of money at stake. No house
is perfect. Understanding and remembering
these two statements will help diffuse the
negotiation stage, the inspection stage and
the closing stage.
Emotions are high for both buyers and
sellers. - The seller may have loving
memories and years of sweat equity in the
house. Maybe they are being relocated and
don't want to go. Understanding their
motivations for selling will help you
appreciate their situation and predicament
during these emotional times.
There is a lot of money at stake for all the
parties involved. Just remember that market
value (the value of a home) is the price
that a willing buyer and a willing seller
can agree to. If you can not agree on a
price, ask yourself: Is there something you
missed? Are there comparables that support
the price that they want? Are there
motivations that might factor into the price
they are demanding? In the end, does it
matter? What is the house worth to you today
and what do you think you can reasonably
sell it for based on the amount of time you
plan to spend in it? Think about the answers
to those questions before you make your
move.
No house is perfect - Always get an
inspection. It might be a few hundred
dollars, but it's worth it. The inspector's
job is to find any problems with the house
that could cost you thousands to repair down
the road. Ask a handyman for an idea of how
much repairs will cost and how complicated
they are. The home buying process can be an
emotional and time-consuming process, but it
is worth it. Nothing compares to owning your
own home in a neighborhood that you chose. |
