There are few purchases in life that carry the financial and psychological weight of buying a home. Whether you are buying your first home, moving up to your dream home, or downsizing your home and your life after the kids have gone, it is important to understand the ground rules for success in the world of buying a home.
Making the wrong decision in buying a home can have devastating and long lasting effects, while making a wise decision in home buying can greatly enhance the overall value of the investment. It is necessary to learn all you can about the world of home buying and mortgages before setting out to purchase the home of your dreams.
While there are plenty of web sites designed to help first time homeowners learn all they can, most financial experts say that there is no substitute for good old one-on-one learning; the kind you will get with am experienced real estate agent and mortgage broker.
When buying a home it is often best to use a systematic approach as this is often the best way to be sure that all decisions are based on information and reason, not on impulse or emotion. Buying a home can be an emotional process, nevertheless it is imperative to keep your emotions under control and not let them cloud your judgment.
There are five basic ground rules when it comes to buying a home and shopping smart:
#1 – Get Pre-Approved for Your Mortgage First
There are few things in life as disappointing as losing out on the home of your dreams due to not being able to secure funding. While the desire to get out there and search for that great home is understandable, it is vital to know if you can secure the financing you will need before you start shopping for a home.
Pre-Qualifying for a home ahead of time has a number of important advantages, including knowing how much you can buy and gaining more respect from the seller. By knowing how much home you can afford before you shop, you will avoid wasting your time looking at unaffordable properties.
It is also important to take a good look at the various types of mortgages on the market before getting started in the home buying process. The mortgage market has changed, so potential home buyers need to understand how each type of mortgage works, and to gauge which mortgage is the best choice for their needs.
#2 – Look at the community, not just the home
It is a good idea to look at the entire community, instead of focusing on a single home. This can be a particularly important thing to consider for those moving to a new metropolitan area, as these buyers will be unfamiliar with the local climate and lifestyle. It is crucial to determine the areas of town that are most desirable, and to consider things like distance from work and local shopping opportunities.
We have all heard that location is the key consideration when it comes to real estate, and that is certainly the case. Buying a house in the wrong area can be a big mistake, and it is important to choose the location as well as the home. Potential buyers can learn a great deal about the nature of various neighborhoods simply by driving around town, as well as by talking to other residents.
#3 – Be fair with your first offer
Trying to low-ball a seller on the first offer can backfire, as can paying too much. It is important to carefully evaluate the local market, and to compare the asking price of the home with what similar houses in the neighborhood have sold for.
Comparing the sales of comparable homes, what are known as “comps” in the industry, is one of the best ways to determine what is fair, and to make sure that you neither overpay or underbid on the property.
#4 – Always get a home inspection
Always investigate the home for any possible defects before making an offer. Compared to the cost of the average home, the price of a quality home inspection is virtually negligible. Make sure to get a good home inspection done before you buy.
To find the best home inspector, it is a good idea to seek out word of mouth referrals as many of the best home inspectors rely on word of mouth advertising.
#5 – Do not alienate the sellers of the home
Many real estate deals have fallen apart due to the personal animosity of the buyer and the seller. It is important to avoid alienating the seller of the home during the process, and to avoid nitpicking every little detail during the sale. Having a good real estate agent on your side will create the proper buffer between yourself and seller, and make for a much smoother process.
Check out my new EBook: “The 7 Worst Financing Mistakes First Time Home Buyers Make and How to Avoid Them.” Just click on the link on the right for your free EBook.