Tips for Buying a New House
1. Consider Your Budget. Low interest rates make it a great time to buy, but is it a great time for you to buy? In general, you should not buy a home that is more than 2 ½ times your annual salary. Use an online calculator that takes into account your income, debts and expenses to determine what you can afford.
2. Commit to Staying in Your New Home for at Least a Few Years. Even in a rising market, given the transaction costs associated with purchasing a home, you could lose money if you don’t stay in your home for more than 2 or 3 years. If you can’t commit to staying in a home for a few years, you should consider waiting to buy.
3. Save for a good down payment. You should try to put down at least 20%. However, if you don’t have 20% to put down, you may qualify for a low-interest mortgage that require smaller down payments.
4. Get a Copy of Your Credit Report. Request a free copy of your credit report a few months before you begin your home search. It’s important that you review this report and correct any errors before you apply for a mortgage.
5. Get Pre-Approved for a Mortgage before Starting your Home Search. Pre-approval is a good way to help you determine a price range for your home search. Knowing what you can afford will save you the trouble of looking at homes that are beyond your range and will put you in a better position to make a serious offer when you find the right house. Ask your realtor or your friends to refer a mortgage broker and shop around with banks and credit unions.
6. Hire a Real Estate Agent. Although buyers have easy internet access to home listings, most buyers can benefit from using a professional real estate agent. An exclusive buyers agent will look out for the buyer’s best interest and can provide invaluable help during the bidding process. Look for an agent that is experienced, honest, connected to the community, and has good referrals from other buyers.
7. Prioritize your Needs and Wants. Consider what you really need from your new home so that decisions will be easier when it comes time to make an offer. Make a prioritized list that includes things that are part of the house, such as a two car garage, as well as things that are not part of the house, but may be just as important, such as the commute and the school system. Take this list with you to open houses and take notes about each property you see. The list will help you compare properties and remember what you liked about each one.
8. Buy in a District with Good Schools. Strong schools are a top priority for many home buyers. The demand for housing in towns with highly rated schools, boosts the property value for homes in those towns. If you want to get the most money for your home when it comes time to sell, you should purchase a home in a town with good schools even if you don’t have school-age children.
9. Do Your Research Before Making an Offer. An offer includes the price you are willing to pay for the house, financing terms and contingencies. Your opening bid should take into consideration the sales price of similar homes in the neighborhood in the past 3 to 6 months
10. Hire a Real Estate Attorney. This is a major transaction in your life, so don’t try to save money by not hiring a lawyer. A real estate attorney can make the process easier and can identify any issues that could with cost you money down the road. You will want to hire a lawyer even if your mortgage company provides one. Your own lawyer will help draft all necessary documents and will ensure that your interests are being represented at every step of the process.
11. Hire a Home Inspector. Hiring a home inspector is money well spent. A home inspector will be able to point out any issues or potential issues that may result in costly repairs. Problems that arise during a home inspection can often be addressed with a modification in price.