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Six 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. Find a great buyer's agent.
Traditionally real estate agents represent the sellers in a
transaction. When you are not working with a buyer's agent, they are
less likely to negotiate the best price or contingencies for you.
A buyer's agent's job and fiduciary responsibility (meaning legal
duty) is to you, the buyer. Before working with an agent, establish
if they are a buyer's agent or a seller's agent. After spending a
lot of time with a Realtor, it's natural to feel like you're a team.
But if they are not negotiating for you, then they are not on your
team.
4. 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.
5. 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.
6.) 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 (and
that includes the realtors) - 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. It's the inspector's job to find
any problems with the house that could cost you thousands to repair
down the road. Some inspectors have a tendency to over play the
importance of their role and the items that they find. Get objective
opinions that you trust before making a decision on an inspection
report. Likewise, if an inspector says a foundation is cracked but
its nothing to worry about - get a second opinion. Ask a handyman
for an idea of how much repairs will cost and how complicated they
are. The home buying process is an emotional, complex and
time-consuming process, but it is worth it. Nothing compares to
owning your own home in a neighborhood that you chose. |
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