October 12th, 2016 5:21 AM by Jackie A. Graves, President
Have you decided to take the plunge and buy? With interest rates hovering at historically low rates, you’re not alone. Buying a home is a major life decision, and for many people, it can also be a stressful one. With so many things to consider, it is easy to feel overwhelmed. While I can’t promise a completely stress-free experience, these tips will definitely help your home-buying process go more smoothly.
Finances are one of the biggest worries when buying a new home, so it’s good to sort them out before you begin house hunting. First, check your FICO score; lenders use this as a factor in your loans and loan rate.
Next, meet with a financial advisor and have them calculate a financial plan for you.
A financial advisor can help you figure out how much your budget can handle so that you don’t overstretch yourself.
How To Buy A House By The Time You’re 35:
If you’re planning to use a mortgage loan to buy your new home, research lending rates and get pre-qualified. This will save you a lot of headaches later. Don’t spend more than you can afford, regardless of the actual amount you’re pre-qualified for. In fact, I recommend buying a house that’s less expensive than your pre-qualified amount so that you can have some savings for incidentals and other important things like retirement.
I reached out to Ivan Choi, a 19-year mortgage banker, past chairman of The Asian Real Estate Association of America (AREAA), Past Board Member, National Association of Realtors (NAR) for his best “insider” tips. “Know the strengths of a federally-chartered bank lender versus a “non-bank”/independent mortgage lender. If you’re buying a higher end home and need a jumbo loan, federally-chartered banks generally have the best rate and terms. When it comes to conventional and government loans, independent lenders will sometimes compete harder for the business due to profit, especially on government loans. On jumbo loans, independents typically don’t have good control on underwriting nor can they make much money,” he shares.
Working with Realtors
Choosing a realtor is one of the most important aspects of the home-buying process. It’s really important to find someone with whom you feel comfortable. Ask friends and family for referrals. If you don’t have any contacts in the area, start your search online. Either way, make sure you research the realtor’s background and go to one of their open house showings if possible — there’s really no substitute for seeing them in action! Narrow your list down to three potential realtors and then interview all of them before deciding.
After you’ve chosen a realtor, remember to negotiate your terms with him or her beforehand. If you’re going to do much of the search by yourself, and just need the realtor for the final negotiation and closing, discuss terms that would be acceptable to both of you. In most cases, if you only use the realtor for finishing the contract, it’s acceptable to ask for a discount. On the other hand, if your realtor helps you with full service, the 3% full commission may be warranted. But, if you’re buying one of your realtor’s own listings, he or she would be eligible to earn a double commission (6%), so he or she may be open to a discount in this particular circumstance.
If feasible, start your house search by renting or living in the area before buying. Make sure you’re familiar with any area in which you’re considering buying a home since it is a long-term investment. To get the broadest perspective, try to live there through all four seasons.
Ask locals questions about the safety of the neighborhoods and check the local crime data with the police department. Always visit any potential neighborhoods at night as well as during daylight hours, and do this on more than one day. If you have children or are planning a family, consider the local public school districts when you pick a neighborhood. Check online to see where schools rank, and ask locals about their school experiences and recommendations.
When searching for the perfect location, think about the amenities in the area. Is it close to everything you need? Factor in the commuting time from work and other places you may visit frequently like grocery stores, schools, and medical facilities.
Once you’ve narrowed it down to a specific neighborhood, it helps to make a list of your “must haves” when choosing a house. Stay flexible and keep an open mind. Think about your needs and what you consider “non-negotiable.” For example, if you’re retired, having a downstairs bedroom may be on your list of “must haves,” while a pet owner may need a large backyard.
When choosing a home, consider how easily you could re-sell it. Homes that would be good rental properties are always a bonus. Don’t buy a home just because it has a lovely view out of the window. Unless you own the land with the beautiful view or it’s on the edge of a protected area, your picture-perfect view could be marred in the future by new construction.
“When it comes to home features, it’s best to consult with an experienced realtor. From a mortgage standpoint, home valuations and appraisals are driven by closed sales of homes in your local neighborhood. Contrary to intuition, attributes like an amazing kitchen with marble floors doesn’t necessarily drive the valuation of your home; recent sales of comparable homes do,” adds Choi.
Inspection and Final Details
After you’ve found a house you love, be sure to get it inspected for hidden problems before purchasing. Get recommendations for independent, licensed contractors or inspectors and choose two of them to inspect your home. This is particularly important for older or historical homes.
Whatever the age of the home you’re buying, make sure you review property taxes, fault lines, and HOA costs and include these in your budget and financial plans.
Before you sign your contract, be certain you understand it. Have your realtor explain it to you line-by-line if needed. Realtors often have relationships with escrow and title companies, and they may be able to offer benefits or discounts for using someone they recommend, so ask about this. Before you sign your contract, ask about all the fees that are involved. For example, using a traveling notary may cost more than $100, while signing the documents at your local escrow company is free. Make sure you investigate all your options.
I hope these tips help you on your way to finding your perfect home. Always ask your financial advisor for help with any questions you have throughout the home-buying process. They can really streamline your home-buying experience and ensure you’re well-prepared at every stage of the process. Happy house hunting!
By Winnie Sun - To view the article click here