Buying a home is the largest financial decision most people will make in their lives. The problem is that most people are not prepared for the ins and outs of the home buying process.
This can lead to mistakes being made which will increase the overall costs of the purchase or cause the purchase to fall through.
Fortunately, there are a number of tips and tricks that you can learn about to help you navigate the home buying process.
Leave Your Money Where It Is
In the 3 to 6 months leading up to your home purchase, you need to leave your money where it is. Making other big purchases or moving money around is not recommended.
This is due to the fact that these movements could impact your credit profile which will make it harder to get a mortgage.
Mortgage lenders are looking for people who are considered reliable and will be looking for a paper trail that shows them this.
Moving money around or making large purchases could cause them to see you as risky and this will increase the interest rates that you are offered.
At this time, you should also avoid taking out new credit cards or amassing too much debt.
Always Get Pre-Approval
There is a big difference between being a buyer that is pre-qualified for a loan and being one that is pre-approved.
Anyone is able to get pre-qualified for a mortgage, but this does not mean that you are actually going to get the loan that you need for the house purchase.
Getting pre-approved is a step further and will show that the mortgage lender has looked at your case and determined how much they are going to lend you.
Not only will pre-approval make you a more attractive buyer, it will also help the buying process run smoothly.
When you know how much you are going to get as a loan, you will not look at properties that are outside of your price range. You will also be able to shop around for the best interest rates and mortgage deals.
Do Not Only Buy For The Life You Currently Have
Considering your long-term plans is something that has to be done before you start looking at houses to buy. Some of the questions that you need to ask yourself at this point include if you are going to stay in your current job and if you are planning on expanding your family.
This is important to consider because your home purchase comes with a long-term loan.
Depending on the housing market and the mortgage terms you have, you might not be paying any real equity on the property for 5 to 7 years.
If you do not think that the house will be right for you in a few years, you might want to reconsider what you are looking at.
Getting a home that you can stay in for a prolonged period of time is important because it makes the financial costs better.
Forget About Timing The Market
A lot of buyers think about when the best time to buy will be with some waiting for certain times of the year to start looking.
While this could result in a deal, you need to be careful with this and possibly forget about it completely.
Trying to anticipate the real estate market is almost impossible because it is constantly changing and you never know what the future will bring.
It is recommended that you start looking for a property to buy as soon as you are able to. This will ensure that you find the perfect house when it is on the market.
Waiting for the market to become better could result in your missing out on the perfect home or the property that you really wanted to get.
Factor In Repair Costs
Even when you find your dream home, there is always going to be that one room in the house that you want to change. While repainting the room may not be a large expense, if you want to update a bathroom or the kitchen you need to be careful.
These rooms will have larger costs when you update or change them and you need to factor this into the overall cost of the house.
Many people make the mistake of looking into these changes and seeing that the cabinets, counters and appliances will not cost them too much.
What you really need to consider is the costs of labour which could double or triple the costs of updating the room.
If you are not able to live with the room as it is for a period of time, but cannot afford to update it immediately, you might want to reconsider the offer you make or the purchase of the house.
Bigger Is Not Always Better
The big house in a good neighbourhood is always attractive when looking at property, but this is not always the best option. Bigger does not always mean better in a property because bigger can often come with additional problems.
Additionally, if you want to re-sell the house in a few years, bigger houses will not have the same return as smaller ones.
This is due to the fact that large houses have a smaller target audience and your home will only increase in value along with the rest of the neighbourhood.
When you have the most expensive and top valued house in the neighbourhood, you are not going to have a big increase in value in a few years. However, if you have a smaller home, you will see a greater increase.
Do Not Become Fixated On Purchase Prices
Many home buyers are fixated on the purchase price of the home that they are looking at, but there are other costs that you also need to consider.
The purchase price is only one of the costs that come with buying a home and you need to ensure that you can cover all of them. Some of the other costs that you need to think about include attorney fees and transfer fees.
These costs will need to be paid during the purchase process, but there are others that come after purchase that you also need to be aware of.
The after-purchase costs that you need to consider when buying a home include the insurance, homeowner’s association fees and property taxes. Depending on where you are buying a property, these costs can add up quickly.
This is why you need to ask some questions about these fees when you view the property. You also need to keep in mind that an expensive home with low costs may be cheaper in the long-run than a cheap home with higher costs.
Do Not Let Your Emotions Get The Better Of You
A lot of people make the mistake of allowing their emotions to take over their home purchase. This is a major problem that you need to avoid at all costs because emotions will turn a blind eye to major issues with the property.
It is also important to be able to differentiate between your emotions and your instincts.
Your instincts should be trusted when you buy a home because they are more objective than your emotions.
They will recognize a good deal based on value while your emotions will have you obsessed with a single aspect of the home.
Staying calm and in control of your emotions will ensure that you get a house that works for you in the long-run.
Do Not Skip An Inspection
Before you finalize the purchase of your home, you need to have the house inspected. Looking at the home during the viewing is a good way to see the potential problems, but a home inspector will look deeper than you can.
Hiring a home inspector will generally cost around $200, but what you could save based on the report is worth the costs.
An inspector’s sole responsibility is to provide you with information about the condition of the house and what it could cost to repair this. Not having an inspection done could result in you buying a house that has foundation issues or a termite infestation.
The report that you get from the home inspector is also a handy bargaining chip which could help you to reduce the asking price of the property.
Look Into The Neighborhood
The initial viewing that you have of the house may sell you on the property, but you need to look into the neighbourhood as well. You should visit the area at different times of the day to determine if it is right for you.
You should also consider how easy it is to get to the neighbourhood from the office because you do not want to spend an hour getting home every day.
There are many tips and tricks that you need to know about when you buy a home. Some of these tips might seem to be common knowledge such as leaving your money along in the lead up to the purchase.
However, there are other tips that you might not have thought about such as forgetting about market timing or getting pre-approved instead of pre-qualified.