#10: Keep Your Money Where It Is
It is not advisable to make any large purchases or move your money three to six months before purchasing a new home. You don’t want to jeopardize your credit profile in any way. Lenders want to see that you are trustworthy, and they want a complete paper trail so that they can give you the best loan possible. You’ll have a difficult time getting a loan if you open new credit cards, accumulate too much debt, or buy a lot of big-ticket items.
#9: Get Your Home Loan Pre-Approved
There is a significant difference between a buyer who is pre-qualified and a buyer who has a mortgage that has been pre-approved. Pre-qualification for a loan is available to anyone. Pre-approval means that a lender has reviewed all of your financial information and determined how much you can afford and how much they will lend you. Being pre-approved will save you a lot of time and energy because you won’t be looking at houses that you can’t afford. It also allows you to shop around for the best deal and the lowest interest rates. Conduct your research: Learn about junk fees, processing fees, and points, and make sure the loan has no hidden costs.
#8: Avoid a Border Dispute
It’s critical to have your property surveyed so you know exactly what you’re getting. Knowing where your property lines are can help you avoid a disagreement with your neighbors. Also, because your property tax is likely based on the amount of land you own, it is best to have an accurate map drawn up.
#7: Don’t Try to Time the Market
Don’t obsess over trying to time the market and determining the best time to buy. It is impossible to predict the housing market. When you find the perfect house and can afford it, it is the best time to buy. Real estate is cyclical; it rises and falls and then rises again. So, if you try to wait for the ideal moment, you will almost certainly miss out.
#6: Bigger Isn’t Always Better
Everyone is drawn to the largest and most beautiful house on the street. When it comes to houses, however, bigger is not always better. In real estate, there’s an old adage that says don’t buy the biggest, best house on the block. The largest house appeals to a very small audience, and you never want to limit potential buyers when reselling. Your house will only appreciate in value as much as the houses around it. If you pay $500,000 for a home while your neighbors pay between $250,000 and $300,000, your appreciation will be limited. It is sometimes better to buy the worst house on the block because the worst house per square foot always sells for more than the biggest house.
#5: Avoid Sleeper Costs
The sleeper costs are the difference between renting and buying a home. Most people only consider their mortgage payment, but they should also consider other expenses such as property taxes, utilities, and homeowner-association dues. New homeowners should also budget for repairs, maintenance, and potential property tax increases. Make sure you budget for sleeper costs so you’re not out of pocket and risk losing your home.
#4: You’re Buying a House, Not Dating It
Buying a home based on emotions will only break your heart. If you fall in love with something, you may make some poor financial decisions. There is a significant distinction between your emotions and your instincts. Going with your instincts means you recognize when you’re getting a good deal on a great house. Going with your emotions is like becoming obsessed with a paint color or a backyard. It’s an investment, so remain calm and prudent.
#3: Have Your House Inspected
Would you buy a car without first inspecting the engine? You wouldn’t, of course. Engage a home inspector. It will cost around $200 but could save you thousands of dollars. The sole responsibility of a home inspector is to provide you with information so that you can decide whether or not to purchase. It is the only way to obtain an unbiased third-party opinion. If the inspector discovers any problems with the house, you can use it as a negotiating tool to reduce the price. It’s better to spend the money on an inspector up front than to find out later that you need to spend a fortune.
#2: The Unknown Science of Bidding
Your opening bid should be based on two factors: what you can afford (to avoid outbidding yourself) and what you truly believe the property is worth. Make an opening bid that is fair and reasonable and will not completely offend the seller. Many people believe that the first time they make a bid, they should go lower. Everything is dependent on what the market is doing at the time. You should look at what other homes in the neighborhood have sold for to get an average price per square foot. Sizing up a house based on price per square foot is a great equalizer. Check to see if the neighbors have plans to build a new addition, a basketball court, or a tennis court, which could detract from the property’s value in the future.
Today, so many sellers are behind on their property taxes, and having that valuable information gives you a great negotiating card. Go to the county clerk’s office to find out.
A bid with an unusual number is more likely to be taken seriously by the seller. A nice round number sounds exactly like every other bid on the market. When you become more specific, the sellers will believe you have given the offer careful consideration.
#1: Scout the Neighborhood
Before you buy, visit the property in the morning, noon, and night. Many homebuyers have been devastated after believing they had found the perfect home only to discover that the neighborhood was not for them. Drive by the house at any time of day to see what’s going on in the neighborhood. Make your regular commute from home to ensure it is something you can handle on a daily basis. Determine the distance between the nearest grocery store and other services. Even if you don’t have children, research the schools because it has a significant impact on the value of your home. If you buy a house in a good school district versus a bad school district, even within the same town, the value can vary by up to 20%.
