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:
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
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
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 i.nete
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,
i.nete or credit is not verified, a pre-qualification
has little value when purchasing a home.
3.) Find a great buyer's
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
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
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
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 parables 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.