Tips for Buyers
Buying your first home, or second or third, is a huge investment. For many people it's the biggest investment of their lifetime. It could even be their retirement fund. To make sure you get the best deal and are protected, there are several steps to be taken before you even begin looking for your new home. This is not a minor purchase, it's something that should be considered very carefully and planned for well in advance.
Personal Finances
The first thing you should do is get your finances in order. Many people don’t realize the importance of credit and how it can affect your interest rate, which affects the amount of home you can afford and your monthly payment.
Banks will look at a number of factors when determining what you qualify for, so as soon as you begin to entertain thoughts of buying a home you should start examining your family budget. If you don’t have one, you should create one; now is a good time to get a handle on your household expenses. Examine the last 6 to 12 months and create your budget based on what you’ve been spending. This would also be a good time to start a savings account for your down payment. This can be added to your budget. The more you have for a down payment, the better off you will be. This can increase the amount of home you can afford as well as help you get a better interest rate.
As you create your budget, determine which bills can be eliminated, such as credit cards. Work hard to get these paid off as quickly as possible and avoid using them. This will help you with your credit. A good credit score is critical to purchasing your new home. You can obtain a free credit report once a year by calling 1-877-322-8228 or logging onto the Federal Trade Commissions website or www.annualcreditreport.com. Examine it for accuracy and get any mistakes taken care of immediately.
Check out our mortgage calculator to see what your payment might be.
Real Estate Agent
Once you are ready to make your purchase, you will want to find a real estate agent to assist you. Hiring a good real estate agent is very important. Don’t let the word "hire" scare you. In most cases the seller is paying the commission. In the very rare case a buyer pays a commission, that will be communicated up front.
Real estate transactions are very complicated and time consuming. Real estate agents do this for a living. You may have bought and sold a few houses, but every year laws and regulations can change. Real estate agents are required to have continuing education every year to maintain their license. They represent their clients objectively. Selling and buying a home can be very traumatic and buyers and sellers can get very emotional and may overlook some very critical issues. A real estate agent should make sure all issues are taken care of. Real estate agents have regulations and laws to follow and if the agent is a Realtor®, he/she also has a very strict Code of Ethics to follow.
Interview several agents before deciding on one. The "top agent" in the area may not necessarily be the best one for you. Make sure your personalities "click." You don’t want to constantly feel at odds with someone. Ask for references - preferably the most recent clients. Is being a real estate agent a full-time job? While you won’t be that agent’s only client, you want to be able to reach him or her in a timely manner. What kind of experience does that agent have? While long-time agents may have experience, they may not be as willing to put in the extra hours for you. A new agent will often be more aggressive. However, a new agent must be willing to find out the answers to the questions they do not know. As you can see, there are pros and cons to both. You just need to be comfortable and confident with who you choose.
Let the agent know your expectations of him or her - how often he/she should communicate with you, etc.
Loan
Get pre-qualified. Use a reputable lender and compare rates. It’s okay to apply with more than one bank as long as you do it within a short period of time. Making application at several companies over a long period of time can actually damage your credit.
It also tells you the price range of housing that you should be looking in and will save you and your agent valuable time. Getting pre-qualified shows your agent as well as sellers that you are a serious buyer. This will help when you put in an offer on a home.
Good luck finding your new home!