15 Tips for Buying a Home this spring
- Make a wish list. First and foremost, decide how many bedrooms and bathrooms you need, what amenities you must have, and those that are not as important. It’s also a must to know your price range and stick to it, and that your spouse or partner is on the same page.
- Get your finances in order. Next, determine your debt-to-income ratio (DTI) or how much you make vs. how much debt you’re paying off each month. And, check your credit score and have your spouse or partner check their credit score as well. Then, pay down credit card debt because this will improve your DTI or creditworthiness. Also, remember not to make any major purchases like furniture or a new car before you close on your new home.
- Decide on a down payment. Any amount below 20% will mean you’ll pay an additional insurance fee called private mortgage insurance (PMI). But, there are programs that help homeowners get a mortgage with less money down. Do your research to find them and weigh the benefits of a lower down payment vs. PMI.
- Research rates. Your interest rate is a huge factor in determining your monthly payment. Talk to several lenders so that you’re aware of current rate ranges — and what you’re likely to qualify for based on your credit.
- Prepare for property taxes. Get an estimate of how much money you’re likely to pay in property taxes because this will affect your housing budget. Your Realtor® is a great resource who can research this amount for you.
- Account for closing costs. Closing costs typically run between 3% and 5% of the purchase price depending on location and other factors.
- Feed your emergency fund. Buying a home will put a dent in your bank account. Experts suggest you have at least six months of income as a backup reserve.
- Get pre-approved for a mortgage. A Pre-Qualification Letter is a great way to show that you’d a serious buyer. This helps you and the seller determine if you’re ready to purchase the home you’ve chosen.
- Learn the process. There are many steps between finding a home and closing on it. The more you know about all the major steps including pre-approval, home inspection, home appraisal, title search, closing, and more, the more savvy and confident you’ll be.
- Pick a neighborhood. Knowing what areas you’d like to live in prepares you to make the jump when it’s time to move forward with an offer. Your potential commute is crucial to the enjoyment of your home. You probably already know what one or two neighborhoods are your favorites and those that are most affordable.
- Study the market. Your Realtor® will help you walk you through this process and give you some insights about the median home price in the area or areas you select, whether you’re in a buyer’s or seller’s market, and whether homes in the neighborhood are selling for more or less than list price.
- Visit open houses. This is a great way to find out about prices in the areas you select and whether your list of features and amenities is realistic with your budget. Sometimes, moving to an adjacent neighborhood will give you more flexibility in price for a similar home.
- Learn what to look for and get an inspector. Once you have signed a contract on a new home, find a home inspector who will help flag potential problems that may be expensive to repair if not found before you close. Your Realtor® will not only have names of good home inspectors to choose from but will help negotiate needed repairs with the seller.
- Determine repair costs. Research what a particular project is likely to cost you such as adding hardwood flooring and whether you are willing and capable of doing some of the work.
- Prepare to compromise and possibly, be disappointed. Keep in mind the perfect home doesn’t exist even if you build it yourself. And, be prepared for multiple offers on the home you select. Again, your Realtor® is invaluable in negotiating the best home for the best price on your behalf.
March 29, 2017