1. Don’t Make Any Large Purchases 3-6 Months Before You Buy. Lenders want to know that you are reliable. Don’t open any new credit cards or add any new debt until you close on your new home.
Lenders will pull your credit up to the day of closing. I’ve known home buyers that go out and purchase new appliances or furniture the weekend before closing and then no long qualify for the home loan.
2. Get Pre-Approved for Your Home Loan Before You Start Looking. This is not the same as Pre-Qualified.
Anyone can get Pre-Qualified for a loan. Pre-Approved means the lender has looked at all your financial information.
They will let you know how much you can afford to buy and how much they are willing to lend you. You will want to refer to you Realtor for Lender Recommendations.
Remember, you are only one mortgage to a lender while your Realtor has 2-3 lenders that they refer millions of dollars worth of loans to.
When your Realtor makes a referral you know the loan is most likely going to close and close on time. If not, that lender stands to lose millions of dollars in referrals over their lifetime from that Realtor.
3. Don’t Try to Time the Market. If you try to anticipate the housing market for just the right timing. The best time to buy is when you find the perfect house.
If you try to wait for the perfect time, you’re most likely going to miss out.
4. Plan For Sleeper Costs. Most buyers focus on the mortgage payment, but they need to factor in the sleeper costs.
What I mean by sleeper costs are property taxes, utilities, homeowner association dues, repairs, and maintenance. Make sure you budget for these.
5. You’re Buying a House – Not Dating It. You want to buy on instincts and not emotions. Going with instinct means you recognize that you’re getting a great house for the value.
You’ll overlook paint colors or minor work that you may want to do. Emotional buying just may break your heart and you can make some pretty bad financial decisions when you buy strictly on emotion.
6. Look Under the Hood. You wouldn’t buy a car without checking under the hood and home buying is no different.
You’ll want to hire a home inspector and your Realtor can refer you several. The home inspectors job is to provide you with information about the upkeep and working conditions of everything in the home.
This report will help you decide whether you wish to move forward or not. Most sellers are more than willing to make necessary repairs in order to sell the home.
Also, understand that the home inspector is NOT going to address cosmetic items. New Homes, a home inspection is even more important.
New home inspections usually are done 3 times during the building process. 1. Frame stage. 2. Drywall and 3. Final.
Home inspections cost anywhere from $300-$800 depending on the size of the home. This will be some of the best money you will every spend.
7. The Science of Making An Offer. Your offer should be something that is fair and reasonable.
Too low of an offer will often insult the seller and often remove you from the chance that they will counter your offer.
Your Realtor will provide you with the necessary comparable to make the best offer you can.
8. Get To Know The Neighborhood. You’ll want to do this during your inspection period. Drop by morning, afternoon and night. Also, on the weekends.
Check out your new commute. Make sure that you’re willing to drive from your new home to work during rush hours. How much travel time does it add to your drive time?
Check out the schools and school district, even if you don’t have children. Buying in a good school district versus a bad school district can add as much as 20% to your home’s value.
Just because you love the home does not mean you’re going to love the neighborhood.