10 BUYER TIPS
The challenge of buying a home in today’s market can seem overwhelming.
For most people, a home is the largest purchase they’ll make, and very few can take on this purchase without a loan. Here is a compilation of helpful tips and best practices you should keep in mind:
1.Take note(s). By Steve McLinden
In a whirlwind house-hunting tour of several properties, buyers benefit by keeping a pro-and-con checklist of each home they visit. Otherwise, the features of several homes tend to blend together in a tired brain by day’s end. Creating a rating scale of 1 to 10 also helps, as does carrying a checklist of specific features that you seek in an ideal home.
2.Drill deeply. By Steve McLinden
Buyers are regularly advised to scope out the block at varying hours, but why not drill down further to see if your potential new neighborhood is fading or flourishing?
Bad signs: A major local employer is struggling or moving away; adjacent neighborhoods are progressively turning into rentals; and a few too many for-sale homes are lingering on the market. Nearby commercial spaces remain persistently vacant.
Good signs: Schools are in high demand and well-rated. Young families and artsy types are moving in. Older couples are “aging in place” and nearby commercial properties are getting redeveloped and quickly leased. For-sale homes are generating multiple offers.
3. ‘Big data’ is everywhere, so tap in. By Steve McLinden
While local knowledge and old-school networking will always be valuable, the latest technology lets agents offer much more. Some agencies offer “livability” ratings by ranking and contrasting neighborhoods by air quality, traffic choke points and specific data on a home’s energy efficiency. In 2013, the National Association of Realtors introduced its Predictive Analytics group. Banks already use “big data” to gauge the worth of foreclosures and short sales.
4. Math versus ego. By Steve McLinden
Too often, buyers get caught up in win-at-all-costs negotiation. They’ll stubbornly let as little as a few grand lock them out of the right house. At an interest rate of 4.5 percent, the difference between paying $200,000 and $195,000 — assuming 1.25 percent property tax and 15 percent down — is only about $25 per month on a 30-year mortgage, or about the cost of lunch for two at a fast-casual eatery, before the tip. Don’t let that ruin your chances at your dream home.
5. Buying? Then cool it for a while. By Steve McLinden
Refrain from making big capital purchases like a new car, opening new credit cards or amassing big chunks of other new debt before buying a home. These raise your debt-to-income ratio, which lenders examine to determine the mortgage amount you can afford. Also avoid moving large sums of money around, changing banks, changing jobs and becoming self-employed before buying a home.
6. Get Pre-Approved for Your Home Loan. By HGTV’s Buying & Selling.
There’s a big difference between a buyer being pre-qualified and a buyer who has a pre-approved mortgage. Anybody can get pre-qualified for a loan. Getting pre-approved means a lender has looked at all of your financial information and they’ve let you know how much you can afford and how much they will lend you. Being pre-approved will save you a lot of time and energy so you are not running around looking at houses you can’t afford. It also gives you the opportunity to shop around for the best deal and the best interest rates. Do your research: Learn about junk fees, processing fees or points and make sure there aren’t any hidden costs in the loan.
7.Don’t Try to Time the Market. By HGTV’s Buying & Selling.
Don’t obsess with trying to time the market and figure out when is the best time to buy. Trying to anticipate the housing market is impossible. The best time to buy is when you find your perfect house and you can afford it. Real estate is cyclical, it goes up and it goes down and it goes back up again. So, if you try to wait for the perfect time, you’re probably going to miss out.
8. You’re Buying a House – Not Dating It. By HGTV’s Buying & Selling.
Buying a house based on emotions is just going to break your heart. If you fall in love with something, you might end up making some pretty bad financial decisions. There’s a big difference between your emotions and your instincts. Going with your instincts means that you recognize that you’re getting a great house for a good value. Going with your emotions is being obsessed with the paint color or the backyard. It’s an investment, so stay calm and be wise.
9. Avoid Sleeper Costs. By HGTV’s Buying & Selling.
The difference between renting and home ownership is the sleeper costs. Most people just focus on their mortgage payment, but they also need to be aware of the other expenses such as property taxes, utilities and homeowner-association dues. New homeowners also need to be prepared to pay for repairs, maintenance and potential property-tax increases. Make sure you budget for sleeper costs so you’ll be covered and won’t risk losing your house.
10. Bigger Isn’t Always Better. By HGTV’s Buying & Selling.
Everyone’s drawn to the biggest, most beautiful house on the block. But bigger is usually not better when it comes to houses. There’s an old adage in real estate that says don’t buy the biggest, best house on the block. The largest house only appeals to a very small audience and you never want to limit potential buyers when you go to re-sell. Your home is only going to go up in value as much as the other houses around you. If you pay $500,000 for a home and your neighbors pay $250,000 to $300,000, your appreciation is going to be limited. Sometimes it is best to is buy the worst house on the block, because the worst house per square foot always trades for more than the biggest house.
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