8 Things to Know When Buying a Home

8 Things to Know When Buying a Home

Spring is in the air, and the sight of flowers and longer days can make a person want to spread their wings and move into a new home. Are you looking to find your perfect home this season? If so, you want to be well prepared to get that home you have always wanted.Here are a few tips that might come in handy:

Mortgage Matters

Getting "pre-approved" for a bank loan will signal to an informed seller that your offer is within your means and should be given serious consideration which can tip things in your favor in a tight housing market. Pre-approval can be a bit more difficult now than in the past, so, beginning the process early allows you to be prepared to make an offer that will be considered seriously.

Be sure that you understand the difference between the various types of mortgages including fixed rates, adjustable rates and balloon payments as well as the benefits and costs of different loan terms such as 15 and 30 year mortgages. If you have any questions, don't hesitate to ask an expert. Depending on your circumstances, you may qualify for a discount or credit as well, so be sure to look into these options.

Credit Counts

Generally speaking, the higher your credit score the lower your mortgage rates and monthly payments. It is recommended that you review your credit report and remedy anything that appears to be inaccurate. You may also want to avoid applying for new credit (so you may want to hold off on buying that new car until after your home purchase) while you are in the home buying process, as applying for credit can actually lower your credit score.

Know Your Budget

A general guideline for mortgage payments is that it should not exceed 28% of your gross monthly income. This helps ensure that you have enough income available for upkeep, maintenance, and insurance. By keeping your payments within that limit you will also be able to put money aside for savings to help in the event of any unforeseen circumstances.

Online calculators can help you estimate monthly payments on homes you are considering, and you can see how those payments compare to your current payments.

Location, Location, Location

The Golden Rule of Real Estate! Decide where you want to live, both in terms of general areas and specific geographic requirements. The location of your home will have a major affect on all aspects of your life: your commute, schools, your neighbors, and where you shop and do business. This is where an expert Real Estate Agent is a great resource. They can help you identify specific issues with certain locations- parking, grounds fees, or other specifics that come with living in a certain locale and an agent that knows your desires will be able to evaluate any issues accordingly when searching for properties.

If you can spend some time in the area you are thinking of moving to--visiting stores, going grocery shopping, talking to people at the park--you can get a feeling of the neighborhood and if it will be a good fit for you. If visiting the neighborhood isn't practical you can learn about the area through local newspapers and online articles.

Timing Things

When do you want to move? Be up front with your moving schedule, and willingness/ability to be flexible. While you may or may not be able to impact the schedule, the more prepared you are with the logistics of the sale; the better off you will be in the long run. Paperwork takes time, and is dependent upon how fast the bank and other institutions move, and how much additional information is needed. Following up with lenders, escrow officers, and your agent can be critical to ensure that documents move through the system in a timely fashion.

Establish a time line to help minimize any moving costs. If you plan in advance for the home purchase and for the actual move, you have the advantage of time to shop around for the best deals on everything from mortgages to moving vans.

Terms of Endearment

You should always know exactly what you are signing. Negotiate terms you can love as you finalize the sale/purchase of a home. While you may not get everything that you want in the negotiation process, you will still know the terms you are agreeing to. And the great thing about negotiations is that if you compromise in one area, you might be able to use that compromise to get something in another area.

How Handy are You?

Is a fixer-upper really for you? Along with requiring some pretty extensive work, these homes might also require more time and money--for the move itself, building permits and other things that can pop up. Purchasing a home in good repair or one in which the seller has recently replaced the roof, carpets, and flooring may come with a higher price, but it might still be worth it if you don't intend to make those repairs yourself.

If you are certain that a fixer-upper is the route for you, then make sure that you are prepared and up to the task. You'll want to do research on projects such as roofing, heating and cooling, especially if you are moving from a different region. You'd be amazed at how different things can be between regions.

Permissions and Permits

If you do take the leap and purchase a home with the intent to remodel it, take a look into permits before assuming that you can do what you want to. Depending on your community and town time-frames around getting those permits and inspections, and the costs involved, can all vary. Don't forget to factor in the permissions needed for the desired improvements into you budget and schedule, along with the cost of materials and labor.

Purchasing a home is a major investment and it's always a good idea to handle it with as much knowledge and preparation as possible. Doing your homework can be daunting and challenging, but on that closing date, you'll be glad you followed through and got the best home you could get. And having a real estate agent that is knowledge and available to help you along the way is an invaluable resource.