FIND A REAL ESTATE PROFESSIONAL WHO’S SIMPATICO. Home buying is not only a big financial commitment, but also an emotional one. It’s critical that the practitioner you choose is both skilled and a good fit with your personality.
REMEMBER, THERE’S NO “RIGHT” TIME TO BUY, ANY MORE THAN THERE’S A RIGHT TIME TO SELL. If you find a home now, don’t try to second-guess the interest rates or the housing market by waiting. Changes don’t usually occur fast enough to make that much difference in price, and a good home won’t stay on the market long.
DON’T ASK FOR TOO MANY OPINIONS. It’s natural to want reassurance for such a big decision, but too many ideas will make it much harder to make a decision.
ACCEPT THAT NO HOUSE IS EVER PERFECT. Focus on the things that are most important to you and let the minor ones go.
DON’T TRY TO BE A KILLER NEGOTIATOR. Negotiation is definitely a part of the real estate process, but trying to “win” by getting an extra-low price may lose you the home you love.
REMEMBER YOUR HOME DOESN’T EXIST IN A VACUUM. Don’t get so caught up in the physical aspects of the house itself—room size, kitchen—that you forget such issues as amenities, noise level, etc., that have a big impact on what it’s like to live in your new home.
DON’T WAIT UNTIL YOU’VE FOUND A HOME...And made an offer to get approved for a mortgage, investigate insurance availability, and consider a schedule for moving. Presenting an offer contingent on a lot of unresolved issues will make your bid much less attractive to sellers.
FACTOR IN MAINTENANCE AND REPAIR COSTS IN YOUR POST-HOMEBUYING BUDGET. Even if you buy a new home, there will be some costs. Don’t leave yourself short and let your home deteriorate.
ACCEPT THAT A LITTLE BUYER’S REMORSE IS INEVITABLE AND WILL PROBABLY PASS. Buying a home, especially for the first time, is a big commitment, but it also yields big benefits.
CHOOSE A HOME FIRST BECAUSE YOU LOVE IT; THEN THINK ABOUT APPRECIATION. While U.S. homes have appreciated an average of 5.4 percent annually from 1998 to 2002, a home’s most important role is as a comfortable, safe place to live.
TAX BREAKS.The U.S. Tax Code lets you deduct the interest you pay on your mortgage, property taxes you pay, and some of the costs involved in buying your home.
GAINS.Between 1998 and 2002, national home prices increased at an average of 5.4 percent annually. And while there’s no guarantee of appreciation, a 2001 study by the NATIONAL ASSOCIATION OF REALTORS® found that a typical homeowner has approximately $50,000 of unrealized gain in a home.
BE PICKY, BUT DON’T BE UNREALISTIC. There is no perfect home.
DO YOUR HOMEWORK BEFORE YOU START LOOKING. Decide specifically what features you want in a home and which are most important to you.
GET YOUR FINANCES IN ORDER. Review your credit report and be sure you have enough money to cover your down payment and your closing costs.
DON’T WAIT TO GET A LOAN. Talk to a lender and get pre-qualified for a mortgage before you start looking.
DON’T ASK TOO MANY PEOPLE FOR OPINIONS. It will drive you crazy. Select one or two people to turn to if you feel you need a second opinion.
DECIDE WHEN YOU COULD MOVE. When is your lease up? Are you allowed to sublet? How tight is the rental market in your area?
THINK LONG-TERM. Are you looking for a starter house with the idea of moving up in a few years or do you hope to stay in this home longer? This decision may dictate what type of home you’ll buy as well as the type of mortgage terms that suit you best.
DON’T LET YOURSELF BE “HOUSE POOR”. If you max yourself out to buy the biggest home you can afford, you’ll have no money left for maintenance or decoration or to save money for other financial goals.
DON’T BE NAÏVE. Insist on a home inspection and, if possible, get a warranty from the seller to cover defects within one year.
GET HELP.Consider hiring a REALTOR® as a buyer’s representative. Unlike a listing agent, whose first duty is to the seller, a buyer’s representative is working only for you. And often, buyer’s reps are paid out of the seller’s commission payment.
When it is time to go house shopping it is really helpful to know how much of a home you can afford. Knowing how much of a house you can afford will help you (and your REALTOR®) to narrow your house search down by price range. Knowing how much of a house you can afford will also help you to determine the other costs that are going to be involved with buying a home like a down payment, monthly mortgage payments and closing costs.
Before you make your final buying or selling decision, you should have the home inspected by a professional. An inspection can alert you to potential problems with a property and allow you to make an informed decision. Ask these questions to prospective home inspectors:
1. WILL YOUR INSPECTION MEET RECOGNIZED STANDARDS? Ask whether the inspection and the inspection report will meet all state requirements and comply with a well-recognized standard of practice and code of ethics, such as the one adopted by the American Society of Home Inspectors or the National Association of Home Inspectors.
If your income and savings are making home buying a challenge, consider these options:
Investigate local, state, and national down payment assistance programs. These programs give loans or grants to cover all or part of your required down payment. The Nehemiah Community Foundation has compiled one of the most comprehensive Down Payment Assistance Program databases in the country to help reduce your barriers to homeownership. There are also national programs including the American Dream Downpayment Initiative from the U.S. Department of Housing and Urban Development.
DECIDE HOW MUCH HOME YOU CAN AFFORD. Generally, you can afford a home equal in value to between two and three times your gross income.
DEVELOP A WISH LIST. What would you like your home to have? Then, prioritize the features on your list.
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