If you’re a hopeful first time homeowner, you might be wondering how to buy a home. The process can seem overwhelming, especially if you don’t have a reliable Kansas City real estate agent like Ed Rippee on your side.
If you want to buy a home and need some help starting the process, consider these tips:
Home sellers won't call you with an offer to buy a home, maintenance-free with the perfect mortgage rate. If you want to find a house, you have to find the gems for yourself. Only by reading available materials, talking to friends and experts, and spending time looking at different homes, schools, and neighborhoods will you end up with your American dream. Research can seem overwhelming, but it’s key to connecting you with your property - after all, you don’t want to purchase a home that isn’t right!
In the home buying process, every decision needs to be clearly thought out. Developing a plan can help you focus on the important factors and organize the entire process. You may even want to use a binder with sections on house hunting, home financing, service providers, etc. -- This will help you stay organized as you buy a home. Loan pre-qualifying helps you determine the home price you can afford and presents you as a genuine prospect to the seller. A lender typically uses the 28% formula (your monthly mortgage can't exceed 28% of your monthly income) in approving your loan. Planning your actions and getting pre-qualified will keep you out of the panic mode and allow you to take advantage of opportunities when you buy a home. A thorough plan will save both time and money!
The days of 10-30% annual appreciation have passed. Homebuyers in the 1970s benefited tremendously from what seemed like ever-appreciating home prices. Now when you buy a home, you're looking at slow growth while guarding against the possibilities of falling prices, skyrocketing ARM rates and corporate layoffs that can dramatically affect values. The classic rule of buying the worst house in the best neighborhood still applies. If you buy with an eye towards improvement, you can customize the home to fit your needs. The saying, "make money home buying, not selling a home," should keep you focused on the long-term importance of the purchasing price as you buy a home.
List the features (fireplace, fenced-in yard, new appliances, etc.) that are most important to you. Establishing "your criteria" early on will save time shopping for inappropriate homes and may keep you from buying a home on a whim. As detailed in Tip #3, your top reason to buy a home should be the value you are getting. Some of your top 10 amenities should logically be sacrificed if an incredible value is available.
Adjustable rate mortgages have an initial fixed rate, which is followed by a period of adjustment intervals during which the rate adjusts based on the performance of several key indexes. When you buy a home, typically the initial fixed rate on an ARM is slightly lower than the comparable rate of a fixed rate mortgage.
A fixed rate mortgage will allow you to take out a long term loan without having to worry about changing interest rates or monthly payments. Most fixed rate loans are offered in either 15 or 30 year terms.
Most buyers will be well-served by a fixed rate loan, but when you buy a home, each situation is unique. While ARM loans have become less popular in recent years, they can still be a viable option for some buyers - especially those who plan on selling again in the short term.
Whichever loan you choose, make sure that you scrutinize all the closing costs. If you are required to have a mortgage escrow account and private mortgage insurance, make sure you understand the terms and cancellation procedures (your Real Estate Agent has publications to assist you). Also, make sure there are no prepayment penalties so that you can utilize an accelerated mortgage plan when you buy a home. A good mortgage reduction plan can save you tens of thousands in interest costs as you buy a home, and shorten your loan term with only small extra principal payments. If you experience negative changes in your job, health, or marital status, you can revert to the standard payments in your mortgage contract.
Make sure that the contract you put on a house allows you to arrange financing, inspect the home and negotiate any problems that you uncover. Ensuring that the contract you sign will minimize potential legal battles and will let you swim in your new pool with your family and neighbors instead of with the sharks.
Before you buy a home, remember that you are about to make one of the most important decisions that will affect both your life and the life of the seller. If you take time to understand the reasons the seller bought the home, their reasons for selling, and the home improvements they have or have not made, you'll be in a better position to evaluate the home and negotiate a better deal. In the end, the process excludes the professionals and comes down to the individuals who sell and buy the home. A closer look at the seller may help you to decide whether or not and for how much to buy a home.
One of the biggest decisions you'll face is how to finance the purchase. There are 10,000 lenders competing for your mortgage business. The days of simply walking into the community bank and negotiating with the loan department manager are over. You can apply for a loan over the Internet or even use a mortgage broker to shop for your loan with hundreds of lenders. When choosing a lender, you want to avoid apples to oranges contrasts by comparing fixed rates to fixed rates, not fixed to ARM's. Create a chart that lists different types of loans, fees, and at least five mortgage providers (including a mortgage broker).
Although it is hard to believe, more people pay for inspections before buying used cars than when they go to buy a home. Paying for a qualified home inspection before you buy a home isn't just spending "a little extra" for peace of mind; it's absolutely essential for anyone who doesn't want to spend thousands of dollars for repairs after they buy a home.
To protect both you as a buyer, as well as the seller, it is a good idea to purchase a home protection plan before you buy a home. What exactly is it? A home warranty, or home protection plan, is a service contract, normally for one year, which protects the people against the cost of unexpected repairs or replacement of their major systems and appliances that break down due to normal wear and tear. A negotiable contract between the buyers and sellers which does not overlap or replace homeowner's insurance policy, this type of warranty can save you lots of headaches, plus put seller's fears to rest. The warranty covers mechanical breakdowns, while insurance typically repairs the related damage. For example: if a hot water heater burst and destroyed a wall in your home, the warranty would repair the water heater and your insurance would pay to fix the wall. Purchasing a home protection plan will give you added peace of mind when you buy a new home.
Follow these tips when you buy a home and the process should go more smoothly! Or to take even more of the worry and work out of buying a home, contact Ed Rippee to get the home buying expertise you need today.