Things to Remember when Buying a House
Helpful Hints to Save Money and Get the House You Want
Dec 14, 2008
Naturally, everyone wants to get a good deal when buying a home. But since most people purchase homes only a few times in their lives, it's hard to gain expertise. Researching and being prepared makes a huge difference in making sure that home buyers don't get taken advantage of, and get a home they will love living in.
Mortgage Hints
Always get pre-approved for a mortgage. Most banks will do this for free, and with no obligation. Make sure to get good estimates of property taxes and insurance so this can be factored into the pre-approval decision. Some towns have much higher taxes than others.
Make sure to first check all local banks for their rates. Some offer better rates for current customers. It can also be convenient to be able to stop by in person for any questions that pop up, and have local numbers to call. Local banks and credit unions will accept same-day loan payments in case you are running late.
Don't take out the full amount of money that you are pre-approved for. The monthly mortgage payment should be based on one's budget, not on how much the bank thinks they should spend. Remember, they want to lend as much money as possible so that they can collect as much interest as possible. Whatever you budget that you can afford, try to reduce that amount even further. Remember, the income you make now could change with lay-offs, injuries, pregnancies, etc. It's always better to be able to save some money every month for emergencies.
Try to put down as much of a downpayment as possible. Many banks require that home buyers take out Private Mortgage Insurance, or PMI, if their downpayment is less than 20%. This is an additional cost that can be avoided by saving up for at least a 20% downpayment before thinking about purchasing a home.
Mortgage Brokers
Be careful using a mortgage broker. While mortgage brokers have access and knowledge to get a customer a good deal from a variety of loan programs, don't forget that in order to make a living they get a cut from whatever mortgage they get customers to sign. Never sign a loan without making sure it's a good deal, one that's better than other banks.
Finding the House
Do as much research before meeting with a real estate agent. It pays to narrow down your options to a few locations. Then you can get to know the areas well and research home prices. This can allow you to make sure you are getting the most house for your money.
Most people should avoid purchasing a fixer-upper, or a house that needs a lot of work. Unless the buyer is extremely handy around the house and has a lot of free time, things often don't end up getting done. Also, if you buy a house that needs some work, make sure the important things (kitchen appliances, electrical system, plumbing) all work. Then, if for some reason the economy tanks, other smaller renovating projects can be put off for later.
Closing the Deal
If you choose to purchase a home without a real estate agent in order to save some money, make sure you get a lawyer. Even experienced home buyers would be smart to have a real estate lawyer. If for some reason there is a problem transferring title of the home, it can cost a lot more to settle everything than it costs for a few hours of a lawyer's time.
Buying a home needn't be an intimidating process. But since you are buying something so expensive, that you will probably be paying off for 30 years, it makes sense to spend a few months researching before you start seriously considering buying.
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