1. Don’t let what is going on in the current market real estate market environment dictate the decision making process. The home buying process is a personal decision, and this decision should be made when you are comfortable.
2. Buying a home is more than just a purchase price. You will also need to budget for taxes, homeowners’ association fees, utilities, insurance, maintenance and updates. Though you may qualify for a particular amount, give yourself some breathing room by scaling back the purchase price and leaving room for anticipate and unanticipated expenses.
3. Explore the different ways you can finance a home to best suit your needs. A popular option for first-time home buyers with little cash to put towards a home is a FHA loan. An FHA loan requires that you only need to bring 3.5% of your own money towards the purchase price. This amount does not include closing, lender and other related fees. It is important to be open with your lender about your current financial situation to identify the best way to finance the purchase on your home.
4. Foreclosures and short sales are not always the best deals. These are complicated transactions and may take more time than you expect in locating and closing on a home. Often times you are competing with investors that are presenting cash offers meaning less risk to the bank thus more attractive than a buyer having to finance the purchase. Another consideration is that most banks sell the property “as is” and in the case of a foreclosure, without a seller’s disclosure. Sure you might get something at a better sales price, but there may be several unanticipated expenses following closing on the home.
5. Before even setting foot in the car with a Realtor, get pre-qualified or pre-approved. This is a powerful tool to you as a home buyer by narrowing down what price range to focus on when searching for homes, and most seller’s with Realtor representation will not even consider an offer on their home without reviewing either a pre-qualification or pre-approval letter.
6. When you are thinking about purchasing a home, think location, location, location. Think about your purchase as an investment. If you were to sell your home 5 years from now, could you sell it. Consider school districts, accessibility to shopping and proximity to work and restaurants.
7. Homeownership allows you to take an itemized tax deduction on your mortgage interest and property taxes. Get with your local CPA to further discuss the tax benefits of homeownership. Note: Homeownership allows for tax breaks and the opportunity to build equity. RENTING DOES NOT!
8. Understand Realtor representation when purchasing a home. Realtors can represent the seller, the buyer or as an intermediary between the two parties. An intermediary can either be with appointments or without appointments. If you are thinking about purchasing a new construction home, you have the opportunity to choose Realtor representation. It does not cost you anything in most cases, since most builders have funds either set aside to pay this fee, or it has already been built into the price of the home. Builder sales representatives do not represent you in a transaction, they represent the builder. It is best to have representation of a Realtor in this case.
9. Know the market prior to writing a purchase offer on a home. An experienced Realtor that knows the area has access to market data that will prove to be in your best interest to review prior to writing the offer. Things that can be taken into consideration is location, square footage, lot size, updates, number of bedrooms, etc.
10. Have a plan. When negotiating a purchase, know your top number and what you are willing to compromise. This is a big decision and should not be taken lightly. Also be prepared that in the process you may not come to an agreement on repair requests that come up following an inspection of the property. In this case are the cost of the repairs something you are willing to take on once you move in, or do you make the decision to move on to another home. Planning will takes the stress out of the home buying process.
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