For many people, owning a home is part of the American Dream. Given the number of available homes on the market coupled with historically low interest rates, it’s no wonder that more and more people are taking steps to purchase their own home. With a bit of careful planning and consideration, you can ensure your future as a homeowner isn’t merely a pipe dream. Here’s three smart steps you can take to help:
Researching Mortgage Rates Online
Once you’ve done your homework in terms of how much you can comfortably afford and the area where you’d like to live, you should research mortgage rates. While one of your goals would be to lock in a low rate, make sure to pay attention to all of the terms of a mortgage before applying or signing on the dotted line — this is not the time to hurry your efforts, as haste truly makes waste considering the length of time you’ll be paying the money back!
In terms of actually finding rate information, the Internet affords a tremendous opportunity to save time and headaches because you’re able to compare mortgage rates from the comfort of your home and on your own time. When shopping online for mortgages, ensure you’re not submitting personal information before vetting the site/company, but be sure to enter as much detailed information as possible about the specific zip code you’re searching in because rates can vary greatly depending on where you’re looking.
Connect with a Realtor
Now that you’ve begun the money and banking part of your journey, you may want to find a realtor — although that’s not always necessary. If you do want the assistance of a realtor, make sure you find one that you’re comfortable working with. Ideally, the best realtors are trustworthy, and will only show you homes based upon your specific criteria, and within your stated budget. They’re also willing to patiently walk you through all steps in the home buying process, without trying to hurry or persuade you to make decisions based on their own personal motives.
Hire a Home Inspector
The importance of a thorough home inspection by a qualified inspector can’t be over-emphasized. If you’ve ever seen any of those HGTV shows where the homeowners are desperate for help because they skipped the inspection or hired the cheapest inspector they could find, you already know that’s true. Think about it. It makes little sense to spend your life’s fortune buying the home of your dreams only to find out a year or two down the road that the place is riddled with asbestos, mold and/or water damage. In fact, it’s a surefire recipe for turning that “American dream” into a nightmare.
What other tips do you have for those looking to buy a home?
Photo Credit: Steve Parker
I am not a big fan of realtors because the often try to push the most expensive house so they get a better percentage, although they are good to feel a neighborhood at first. I would recommend checking the neighborhood by day, night and on weekends, to picture yourself really living there.
One of the good things about realtors is that they have multiple listing so you can go through it, look at the pictures and decide to go and see some houses.
Find a short list of houses through realtor.com, then the realtor. Also, research tax and insurance rates locally before deciding how much you can afford.
I totally agree about the taxes and insurance. People often forget that even the base cost of your house without the various repairs is not hardly just your mortgage. We are closing on a house where the mortgage will be $1,400 a month and the taxes are estimated as $550 a month. Then add insurance and you are talking 50% more a month over your mortgage cost. That is a lot of money to overlook.
Also I have no idea where the writer is finding all this Inventory — when most inventory is down to about 25% of what it would normally be in many places. That means mountains of competition. Be prepared to offer far over asking — which means get prequalified, then don’t look at houses at the top of your price range, look at houses $100,000 under your price range. And if it comes in the market today — see it today, and be prepared to put in your offer tonight. You’ll get a shot.
I am not inclined to forgo a Reator. The seller pays your Realtor’s commission and they should be YOUR agent in the biggest purchase you’ll ever make. Best to have representation that is really on your side rather then trust the Seller’s Agent to be fair to you. Seller’s Agents can’t lie, but they can’t help either. BTW, this last house purchase our Relator did not find any houses for us to look at. We looked them up on RedFin, told him what we wanted to see, and he took us. We never saw anything out of our price range and that wasn’t [as well as it could be] pre-qualified for our needs.
Great tips! I also recommend applying for HARP home loan program. It offers more affordable payment and lower interest.
When we were considering our cross-country relocation, the first thing we did was hop into the car and drive around the neighborhoods under consideration. By going through the neighborhoods at key times of day (morning, after school and early evening) you get a flavor for the area and whether your lifestyle will mesh with the existing rhythm of the place. If there’s not a good fit, best to look elsewhere for a new place to live.
Len you’ve not said a word about having a down payment. And with Obama nagging the banks to loosen the requirements for loans so that his favored classes (those with no downpayment and not finalcially stable) can buy houses, to make it “fair” we are headed back into the morass from which we have not yet emerged. As for there not being any inventory, it is there, but it is “shadow inventory” as there are a lot of places where the banks have not yet begun to foreclose or finished foreclosing on those who haven’t made a payment in a long time. If you have a decent downpayment, say 10 or 20 percent, you can get a loan without paying PMI which is monthly insurance which further bloats your payment. Also, if you have literally or almost nothing down because you’ve been unable to save a downpayment, you can’t afford a house. A realtor will not tell you this, the bank will not tell you this, they both want to close the deal. The agent gets the commission upon the closing, the bank bundles and sells the loan to another company, so the bank gets their money that way. You, with no downpayment, have some financial mishap and you lose your house and those of us who have paid for our properties in full or are current on mortgage payments, suffer with declining values, empty houses in the neighborhood, because of home buyers who are undercapitalized from the start. No downpayment? You can’t afford a house.
Absolutely correct, de Ruiter. Everyone should have some skin in the game, for the reasons you cited — but that’s not how it works anymore, unfortunately.
I remember my first house (bought in 1990) required a 10% down payment. Those days seem to be gone now. The lack of a down payment requirement — or very small ones — are a big reason the housing market is in the shape it’s in today.
You also need to watch Out for covenants and restrictions. You don’t want to buy and find out later that you cannot have a dog, a pool unless inground, window coverings that are not white, a nonpermanent outdoor grill etc. Also make sure you can remodel or add to the house. I want the minimum rules, remember always that rules can be interpretted loosely or STRICTLY. The latter can ruin the neighborhood. Many of the HOA rules drive your costs up by 100 percent or more. Make sure you can live without the freedom to decide for yourself before you settle for less than full control of your own home.