Steps To Take When Buying A House

They say buying a house is part of the American dream. Buying a house is one of life's biggest events. When you are ready to take the leap, here are some steps you need to take.

What to Consider Beforehand

Make sure you are ready to become a homeowner because it is not always the best decision for everyone, renting might be the best way to go for some. There are a ton of responsibilities that come along with owning a home such as regular maintenance, inspections, taxes, and more.

Another thing to consider is the timing factor. Look at the mortgage rates and home prices are they rising or staying the same? If the rates are starting to take a leap, then you might want to move quickly. Also, the time of the season can also determine the best time for you to start your search. Spring is typically when listings hit the market. This means that there will be more options for you to choose from. On the downside, it is the most competitive season for buyers.

The last and most important thing is are your finances in good shape. Only set out to purchase a home if you are financially stable. Remember you will need to set aside savings for a down payment and closing costs. If your credit score could be higher, pay off some of your debt to boost your score.

How to Plan Your Budget

Budgeting is essential when it comes to buying a home. Set a time frame of how long it will take you to build up a good down payment. Once you have this timeframe, research Realtors in your area and find the best fit for you. Keep in mind that it takes around a couple of days to a couple of months to find your ideal home, then around 30 - 60 days to complete the transaction from contract to close.

Along with finding a real estate agent, you will need to find a mortgage lender. The best bet is to shop around for the best rates and offers. This will also depend on your credit score. Having an established credit history and a high credit score can allow you to get a better rate on a mortgage.

To check your score, obtain a credit report from Experian, TransUnion, and Equifax. These three credit bureaus allow a free report every 12 months. Lenders typically require a credit score of 620 or higher to be able to obtain a mortgage. If your score is a little iffy, raise it before you apply for a loan.

In order to raise your credit score you will need to pay your bills on time, pay off debt and keep a low balance on your credit cards, and check for any mistakes on your credit report. Lenders want to know they can depend on you to pay you mortgage payment on time.

If you are not able to raise your score or get it over 620, then there are other financing options available. The Federal Housing Administration (FHA) only requires a score of 500 with a 10% down payment or 580 with a 3.5% down payment.

How Much House Can I Afford

When buying a home, you are not just paying the listing price, there are hidden costs. When budgeting, allow for a down payment, closing costs, moving and maintenance costs, as well as an emergency fund for any unplanned maintenance.

You will need to set aside at least 20% of the price of the home for a downpayment on a conventional mortgage. Closing costs are another thing you will need to pay out of pocket which can be between 2% and 5% of the home's purchase price. Remember to always factor in closing costs to your budget! You will also need to pay to move and make any necessary repairs before moving in.

Along with your monthly mortgage payment, you will also have monthly expenses such as utilities, transportation, groceries, entertainment, childcare, credit card debt, savings, etc. A good rule of thumb is for your mortgage payment to be below 28% of your monthly income.

Shopping Around for the Right Everything

When purchasing a house, you not only have to shop around for the right home, but also for a Realtor and a mortgage lender. Doing your due diligence on both can save you time, money, and heartache.

There are many lenders out there who offer different rates and terms. Shop around for the best lender who offers better products. There are several different types of loans with different qualifications. A lender can help you choose the right one for you and also get you pre-approved.

A pre-approval letter can sometimes be the golden ticket for the seller. This tells the seller that you are a serious buyer and you have the finances to back it up. In order to get a pre-approval letter, your lender will need to verify your finances and check your credit score.

A Realtor is your saving grace through the entire process. When choosing a Realtor, it is always good to get referrals. You want to make sure the agent your are considering has a good reputation and experience. It is a good idea to interview several agents to see if they are a match and would work well with you.

Once you have a lender and a Realtor you need to find your home. An agent can help narrow your search by finding a home that fits most of your needs and wants. Your agent should have an extensive amount of knowledge about the neighborhoods you are interested in.

Reaching the Finish Line

Once you have found your home, it is time to make an offer. Your Realtor will advise you on the best approach and will negotiate your contract. Once everything is settled such as contingencies, a home inspection, and disclosures, you are ready to close. Remember your Realtor will help you along the way and make sure you get the best deal.

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A Dozen Must Haves For Today's Buyers

By now everyone has reshaped the way they see a home. The COVID pandemic pushed city dwellers to the suburbs and prices took a sharp turn up with the supply and demand. One thing that has not changed is location. Zillow reports that buyers look for a safe neighborhood, walkable neighborhood, close to shopping, short commute to school and work, sense of community, close to friends and family and preferred school district. Here are the top 12 amenities buyers are still looking for.

1. Updated Kitchens and Baths

These two areas of a home are where homeowners spend a lot of time. In a survey conducted by the Metropolitan Regional Information Systems Inc., 81% of those who were surveyed said that updated kitchens and bathrooms were the most important feature in a home. That means that the majority of buyers who are looking for a home will make a decision based on the kitchen and bathroom conditions.

2. Open Floor Plans

Especially after the stay-at-home orders, an open floor plan is a must-have feature. Open floor plans are less confining and are more versatile. Now that we can all get together again, an open floorplan is great for entertaining because it allows for mingling and a great party flow. If a homeowner is still working from home, an open floor plan can allow for a great space to create a temporary workspace.

3. Air Conditioning

Every region in the county has some sort of change of season whether you live in a warm climate or cold climate. Central systems are a great way to keep your home at a comfortable temperature. Air conditioning is a great way to maintain humidity in your home's environment.

4. Energy Efficiency

Over the last several years this has become a very important feature in a home. As they say,  the green movement is here to stay. Buyers are looking for homes with energy-efficient windows, insulation, heating systems or solar panels. These are a few features that can help with not only your energy cost but with the planet as well.

5. Low Maintenance Features

Low maintenance and energy efficiency complement one another. These features keep the cost down on a home, especially for a first-time home buyer who is having a hard enough time coming up with a down payment. Every penny counts!

6. Technology

New York City is a place that is very technically savvy but when it comes to living there, people are moving out because of the poor Wi-Fi connections and good cell service. Buyers are looking for more tech-friendly homes nowadays. A strong dependable Wi-Fi connection and good cell service are a must.

7. Curb Appeal

A buyer's first impression is when they drive up to a home. The wow factor has to be there to catch their attention. A good way to accentuate the curb appeal of your home is to add plants, a new front door, new stonework, a new portico or outdoor lighting. You want to do everything you can to enhance your home from the view of the street.

8. Bringing the Outdoors In

Buyers want to be able to enjoy nature and have outdoor spaces. During the pandemic being stuck at home meant you had to have a space outdoors to be able to get outside every once in a while. Buyers are looking for porches where they can sit and eat or have a cocktail party. Stone patios with outdoor kitchens and outdoor furniture have become very popular.

9. Laundry Rooms

Laundry is always piling up, especially with busy lives. A laundry room is a great addition because you can close the door and hide your dirty laundry so to speak. In this day in age, it is very rare anyone has time to do the laundry every day so a place to store it is a must. A laundry room closer to the bedrooms is a plus.

10. Garage Area That Can Work as Storage

Buyers are always looking for storage space. If you have storage space in the garage, this is a bonus. Houses can get cluttered very quickly so having a place in the garage to store items is a very handy must-have.

11. Walk-In Pantry

Most families buy in bulk at stores such as Bj's or Costco, so they need a place to store the large quantities. Buyers want a walk-in pantry. Even if buyers do not shop in bulk, most do not shop on a weekly basis, so they need a place to stock up.

12. General Suitability

A buyer does not want to walk into a house that has bright pink walls in the bedroom or ugly bold colors in the kitchen. Buyers tend to be attracted to homes with neutral coloring, high ceilings for airflow and lots of natural light.

Every home will not fit all a buyer's wants so you will want to prioritize what is most important. A realtor can help you prioritize and negotiate for you when purchasing a home.

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Seven Tips to Make Buying a House Easier

 
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Purchasing a home is in the top five most stressful events. Buying a house can be a complicated process but there are ways to make the process easier. Here are seven things you can do to simplify the process of purchasing a home.

1. Get your paperwork in order

 

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Getting your paperwork in order such as two years’ worth of tax returns, current pay stubs, bank statements for the last three months, cancelled rent checks, or copies of your lease for a loan application is one of the first steps. You will need to be pre-approved for a specific amount. This will help you with how much you can afford on a house. Realtors and sellers both want to see a pre-approval letter that lets them know you can afford the home and you are a serious buyer.

2. Find a real estate agent you can trust

 

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Finding the right sales agent is a very important step in the process of purchasing a home. Before choosing, interview at least three real estate agents. You will not only want to have a good rapport with an agent, but you will want to make sure they are well-rounded in the community you are looking to purchase a home in. You will want to choose an agent with the best track record of sales in your area, the best online or personal recommendations, and the one you like best. Staging, keeping a home show-ready, and listening to tactfully delivered feedback from people who’ve viewed your home means you’re going to be interacting with your agent a lot.

3. Start researching banks, credit unions, and loan officers

 

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Just like choosing the right real estate agent, choosing the right place to apply for a loan for your home is just as important. There are many types of loans and different institutions to choose from. Sometimes it might seem best to use a bank or credit union, but this is not always the case. Many times the banks and credit unions have vested interest and might push you to use certain Realtors, attorneys and home inspectors because they receive a portion of the commissions.

4. Get your financing in order

 

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After you have chosen your mortgage lender, you will need to get pre-approved. As mentioned earlier, you will need to have your paperwork in order along with your finances. The pre-approval letter is your ticket to let sellers know you are a serious buyer who can afford their home.

5. Find a home inspector you can trust

 

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A home inspector is a key factor in the success of your home purchase. You want to choose an inspector you can trust who is looking out for your best interest. In an older home, a trustworthy inspector will point out areas of concern such as problems with termites, water seepage, or shoddy construction. Find an inspector who would not mind if you tag along during the inspection. This is a good time to ask questions and get their advice.

6. Consider investing in title insurance

 

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Purchasing title insurance is a safety net against anything that could pop up on the property such as a lien. Title insurance cost from $1,000 and $3,000 on average, or .05 percent of the purchase price and is worth the cost. In many cases, mortgage lenders will require you to get title insurance.

7. Get your tradespeople lined up

 

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Renovations or repairs are a big part of homeownership. Have tradespeople lined up so that when something does go wrong, you can call on the spot. It is important to make sure they are reliable and honest. Ask around at places such as an independent home supplier. An independent home supplier will usually have the low down on who does sloppy work and who does good work.

Remember never try to purchase a home on your own. Follow these steps to simplify your home buying process. A local real estate agent can guide you through the process.

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