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Tips for buying a home

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Virtually all home buyers, whether purchasing their first home, or their umpteenth, can feel confused and nervous about the home buying process. Because there are so many steps and considerations, it is helpful to have a plan. The agents at Town and Country Estates can help you through this process, but the more you know before you look, the better you will do. Here are some handy real estate buying tips that might serve as a checklist for buyers and prospective buyers.

1. Determine your wants and needs

It may be tempting to pick up a real estate magazine, and circle all the “dream homes” but the real estate buying process can be a lot smoother if you first narrow down your wants and needs before you start looking at houses. You might want to ask yourself the following questions:

 

  • What is the purpose for which you are buying a house? For living, investing…? For how long do you estimate to keep this house?

  • In what type of location do you want to live? Do you want to be close to schools, work or shopping and entertainment? Do you prefer an urban or a country setting?

  • What kind of house do you want/need? Do you have any specific preferences for an architectural style? How many bedrooms and bathrooms do you want? Do you want a yard, a patio, a garden?

  • Do you prefer a townhouse, a condo, a single family home…?

  • What is your budget? How much can you afford? What you can afford depends on your income, credit rating, current monthly expenses, down payment and the interest rate. It is best to visit a lender to find out for sure.

  • Do you prefer to own, rent or lease?

Having your preferences in place will speed up the search process. Of course, it will be a rarity to get that perfect dream house that is all that you longed for and fits the bill too, but if you have your wants and needs in place, you’ll also know the areas where you can compromise and the areas where you can’t.

2. Get educated in home buying basics.

Once you have your needs and wants in place, it’s a good idea to get prepped in real estate where you are looking. For starters, you may ask friends or relatives who’ve been through the process, but avoid the mistake of relying solely on their advice to make important decisions. Have a general discussion with a real estate agent (not a meeting leading to an agreement with the agent) about a typical home buying scenario or the real estate customs in your area. Alternatively, you may also talk to a bank loan officer or mortgage broker who can give you a basic overview of the process.

Engage in some self-education by browsing through real estate advertisements in newspapers and homes magazines. This will give you a good idea about the type of homes on the market and their costs. Check out if the realtors in your community have hosted any television programs or interactive phone systems, visit open houses on the weekend, etc. Looking at a few homes at this stage will give you some ideas for things you’d like in a house but haven’t considered.

3. Get your finances in order. 

The process of buying a home or investment generally starts with determining your buying power; that is, your financial reserves plus your borrowing capacity. Know your credit report. These reports are a continuing look at how you manage your finances. You must know exactly what your credit reports say about your financial history before you apply for a mortgage, because the reports play an important role in the mortgage approval process and in determining the interest rate and other loan terms that a lender offers you. And make sure the information in these reports is accurate. If you haven’t looked at your credit reports, you might be surprised at their contents, because errors are not uncommon. If you find any errors take steps to correct them immediately.

Also, start saving money at the earliest. You’ll need to have cash on hand for a down payment and closing costs. Moreover, don’t incur any additional debt, especially if you are depending on a mortgage to move in. An increase in your debt to income ratio reduces the amount of monthly income available for your mortgage payment.

So clear your credit card balances, don’t apply for any new cards and postpone major purchases on your card till you are through with the home deal. Even reserve your cash deposits since banks consider cash reserves when approving your mortgage.

It is also prudent to consult a realtor or mortgage lender to determine the size of the mortgage you would qualify for. While it’s up to you to determine which lender is best for your needs, it’s always a good idea to have at least a bit of background about the loan process before you talk to a lender. For example, you should know the difference between a mortgage broker and a bank officer, learn facts about private mortgage insurance and watch out for loan frauds.

Lenders like to see a consistent job history, so if possible, don’t change jobs. They may not be so alarmed if you change jobs within the same field, but it’s better to stay put until the house is yours.

4. Don't try to see every house in town. 

Your job is to make the final selection of the right property for you. This is when excitement and emotion run high. Your real estate agent can assist you in the selection process by providing objective information about each property. When you find the perfect home, buy it. Do not wait till you’ve seen every home that’s on the list. You’ve already done your pre-search survey and by now you’re already familiar with what is out there and what it is that you want. So don’t wait till you’ve visited every home in the County. Proceed to make an offer and close.

5. Scrutinize before making an offer. 

Apart from the structure and features of a house, there are many other things important to a purchase that have to be checked. Depending on the area and property, this could include inspections for termites, dry rot, asbestos, faulty structure, roof condition, septic tank and well tests, just to name a few. Your agent can assist you in finding qualified responsible professionals to do most of these investigations and provide you with written reports. You will also want to see a preliminary report on the title of the property.

Here are a few things to consider:

  • Check the resale potential of the property. This depends on the development that is happening in the neighborhood, type of home buyers in the neighborhood, features of your home and how much in sync they are with the trends, etc.

  • Evaluate contract contingency basics. Home buying contingencies are written clauses in your contract that allow you to back out of the contract with no penalties if contingencies aren’t met. The pre-printed contract forms used by real estate agents always include common contingencies like financing, home and other inspections, surveys, sewer and septic systems, etc. Use the pre-printed forms when possible instead of writing your own contingencies, because forms are written to adhere to the laws of the state they are used in.

  • Learn facts about modular, manufactured and site-built homes because the differences can affect a home’s price and its resale value, and even dictate whether or not it can be built on your land.

  • Get familiar with facts about easements and rights-of-way, which basically define whether others have a right to use your property or not.

  • Understand the restrictive covenants and other deed restrictions for the real estate you want to buy, because they dictate how you can and cannot use the property. Restrictive covenants are deed restrictions that apply to a group of homes or lots, property that’s part of a specific development or subdivision. They are normally put in place by the original developer, and are different for every area of homes.

  • Measure and calculate your residential square footage and get it down on paper. Inaccurately reported square footage is the subject of numerous complaints made each year to state real estate commissions. A small percentage of cases involve willful misrepresentation, but a larger number of complaints occur simply because agents and sellers don’t know how to measure a home’s square footage.

  • Get familiar with the heating system in the new home and check if it is efficient or not.

6. Make an offer. 

There are a myriad of negotiating factors, including, but not limited to price, financing, terms, date of possession, and often the inclusion or exclusion of repairs and furnishings or equipment.

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