It may seem like common sense, but if you are saving to buy a house, you should be saving your money. This means taking a bag lunch to work instead of eating out, cut down on partying with your friends, and possibly even skipping this year’s vacation. It may be difficult in the short-term, but it will all be worth it once you move into the home of your dreams.
Before you even start the house buying process, it is a good idea to get an approval letter from a mortgage lender. This way, you know how much you can spend ahead of time. This will very quickly narrow the options of what you can afford to buy, and it also makes the final paperwork go a lot more quickly and smoothly.
If you get approved for a mortgage, you may be jumping for joy, and ready to go looking for a house. Before you do that, get a second and even third opinion from different banks and mortgage companies. You may actually get a higher estimate or a lower interest rate from another bank. Try to go for banks that you have a positive credit history with already, because they are more likely to want to work with you, if they see you as a valuable customer.
A lot of first-time home buyers make the mistake of believing that they have to pay the whole listing price on a house. If a house has been on the market for a while, you can try to take a few thousand dollars off the asking price. If they are eager to sell, they just might say yes, or offer you a counter-offer.
When you buy a home, you have to give the down-payment, but you are also responsible for the closing costs. This is a minimum of $2,000, but it may be more, depending on where you live. Ask your real estate agent for an estimate.
It’s easy to get your hopes up when you think you might buy a house, but doing this will potentially end up in a big disappointment. Buying a house takes a lot of time and paperwork, and sometimes, a lot of hard work can end up fall through at the last minute. It is better to go into a house buying situation with low expectations, and being pleasantly surprised when things go well.
Do you like Colonial style, or a Victorian? Three bedrooms, or four? Make a list of things you want from a home. Don’t assume that anything is out of your price range. Real estate agents can help you find houses that are not public knowledge yet, so you might be able to find a house that pushes all the right buttons.
Once you know what you want, figure out what you and your partner don’t want from a house. Maybe you don’t want the responsibility of having a swimming pool, or you absolutely hate split-level houses. It is better to be completely honest up-front in order to avoid arguments and disappointment later on. Makes a list of these deal-breakers with your partner, and hopefully you can both agree on the things that you do and do not want.
The cost of moving into a new house will vary greatly depending on how far you need to drive or fly. You also need to decide if you are going to hire a moving company to help you carry everything inside, or if you will save money by renting a truck and getting help from family and friends. In some cases, it might actually be easier and cheaper to give away your old furniture and buy all new stuff when you get to into your new house.
Remember that if you need to take time off work in order to move, this is also costing you money, as well, so take that into consideration. After a little bit of research, it will become clear what your best option is.
Real estate agents are only human, after all, so if you meet someone that rubs you the wrong way, don’t be afraid to find someone new to work with. You will be spending a lot of time communicating with your real estate agent while you get your paperwork completed, so it is important to find someone you trust and get along with.
In some cases, like if you are buying a foreclosed home at a sheriff’s sale, it may be necessary to hire a real estate lawyer on top of your agent or broker. This does not apply in every case, but if you have a complicated situation, don’t be afraid to pay for a consultation, because their help may save you money, time, and grief in the long run.
Some neighborhoods charge an Homeowners Association (HOA) fee in addition to your mortgage. This is most common in gated communities and brand new developments. The fee usually covers things like removing snow from the streets and sidewalks, sewer, landscaping, and spraying for termites. If you would rather pay for all of these things on your own, it may be better to find a neighborhood that does not require HOA fees.
When you are looking for a new property (especially with a partner) there is no guarantee that you will get 100% of what you want in a dream house. You should expect that there will be a lot of give and take for everyone involved, including your children.
The level of crime in any area makes a huge difference to your quality of life, especially if you have children. Check out CrimeReports.com to see how much crime is in the area where you plan to move to. We don’t want your house to get broken into right after you buy it!
Depending on your personality, you might be a real go-getter who is ready to tackle any problem that may come your way. But before you dive head-first into a fixer-upper, really take a minute to figure out how long each repair will take, especially if you do it on your own. A house renovation is usually wrapped up in a single episode of a show on HGTV, but in reality, it usually takes several months to finish a major renovation. Remember that doing repairs on your own will also take away from your work schedule and personal life.
When you go to apply for a mortgage, the lender will want to see at least three months of bank statements as proof of income. In preparation for this, you should start to “clean up” your bank account, which may mean cutting down on your normal embarrassing purchases, because they will be able to see every transaction you make.
A lot of newlywed couples will get a gift of money from their parents after they tie the knot, and for some, it is a significant amount of money. If you deposit this into your bank account, your lender may be suspicious that you may have actually taken out a loan from your parents, and that you will be bogged down with repaying multiple parties. Ask the person who gave you this gift to sign on a piece of paper that they gave that money to you as a present, and not a loan.
Banks and mortgage companies will want to see last year’s taxes, so make sure you bring a copy with you. If there is something concerning you about your taxes, feel free to visit an accountant, because the IRS allows you to amend your taxes for up to 3 years. If you are self-employed, the lender will want to see your tax statements from the past three years, and they will average them all together.
When you are buying a house, it is almost guaranteed that Murphy’s Law will come into play. (“If it can go wrong, it will.”) Try to set aside a couple thousand dollars for unexpected costs, so that you are prepared to pay for things that come up, instead of borrowing more money.
Even if you are looking to buy a “forever home”, you may want to downsize after retirement, or maybe you will get a new job in another state. This is especially important when you are doing rehab projects. For example, maybe you want an all-pink house, but all future buyers are going to be completely thrown off.
When you are touring a house, flush the toilets and check the water pressure in the sink and shower. If it seems weak, it may be an indication that the house needs a new water pump, or there could be an expensive plumbing issue.
Depending on where you live, your real estate agent may not be obligated to tell you when something has gone wrong with the house. Sometimes, a house is listed “As-Is” in order to protect a seller from being liable for any major problems with the property. Ask the real estate agent to be as honest as possible, and if they have any paperwork available. If at all possible, do some research on that address online, too.
Plenty of people buy a “starter home” before they move on to upgrade to a “forever home”, but in some cases, it is better to try to think into the future and buy the best house right away. Even if a house is perfect for what you need right now, try to imagine yourself 5, 10, or 20 years from now. If you have kids someday, is the house going to feel too small? You will save yourself a lot of time and effort from moving place to place by thinking into the future.
If you are very insistent on having one or two particular things in your future house, you are going to have a very hard time finding something that fits your every single one of your needs. For example, if you must have a wrap-around porch or a swimming pool, it could limit the possibilities in your home-buying search. Try to be open-minded, and remember that you can always add upgrades later after you settle down.
When you move into a house, there could be things about the property that may end up with someone getting sued or seriously injured. For example, are there dead trees that can possibly fall on your neighbor’s roof? Is there a rusty swing set in the backyard? Is the floor about to cave in? Calculate the cost of getting these things fixed, because they need to be dealt with almost immediately to prevent something terrible from happening.
Even if you are perfectly healthy, you never know if you will get sick or injured. Check for doctor’s offices that accept your insurance provider where you live, and make a test drive to the nearest hospital, so that you know where to go in case of emergency. If you or a family member has a pre-existing health condition, proximity to good health care can make a huge difference.
47. Estimate The Cost Of Your Homeowner’s Insurance
It is a very good idea to get homeowners insurance when you buy a house, but make sure to ask the right questions about the policy with your insurance agent. For example, if a house is located in a floodplain, the insurance company might refuse to give you flood insurance, because they do not want to give you a payout.
Normally, it’s not polite to stare, but you should try to pay attention to the type of people who live next door or on the same street. Your interaction with your neighbors makes a huge difference in the comfort and happiness of your new house. Some obvious red flags to watch out for are lawns that have not been cut in ages, old broken-down cars sitting in the yard, or any signs of anything dangerous like gang activity.
If you have dogs or cats, this house will be their new home, too! Keep them in mind when you are looking at a potential neighborhood to live in. How easy or difficult would it be to walk your dog in the morning? If you don’t have a backyard, is there a dog park nearby for them to run around? Depending on how seriously you take your furry friend’s well-being, it may narrow down the options of where you can live.
Before you jump into the huge responsibility of buying a house, ask yourself if you are truly prepared for the worst case scenario. Do you have enough money saved to continue paying the mortgage if you lose your job for a couple months, or you need to have a surgery? What if you get a divorce? These are not nice things to think about, but it is better to have a game plan than to be caught off-guard. Too many people lost their homes in the 2008 recession because they were not prepared for the worst. It’s not good to dwell on the dreaded “what if”, but by preparing for anything, you can stay calm and enjoy your new home to the very fullest. Good luck!