Steps To Buying A House
As you are contemplating whether you should buy a house or not, here are a few basics to consider. Do you feel comfortable that your employment is secure and that you can afford it? Do you have the time and desire to keep a home in good repair? If the answer is yes, then there are some very basic and important steps to buying a house.
Whether you are a first-time home buyer or not, you will probably want to work with a broker because they know the market and can be a valuable source of information concerning the home buying process. You will want to make sure that the broker has access to the Multiple Listing Service (MLS) which is a service that lists all the properties for sale by most major brokers across the country. Normally the seller pays the brokerage commissions therefore technically they are working for the seller. The real world is, they don’t make a dime unless you buy, therefore in actuality the situation is that they are working for the buyer. Either way, they are professionals and have a license to protect, therefore they really are obligated to all parties.
In a depressed market you can get some rock bottom deals on new homes and used homes. A new home may cost you a little more, however you may have to spend big bucks to bring a second-owner home up to current energy codes and you may incur many other repairs.
There are three renown requirements in regards to buying real estate, location, location, location. Look at neighborhoods, schools and other services that play a large part in making a neighborhood attractive. These features may not affect you now, but they may affect your future buyer. This factor will also apply to a house that has a negative aspect that you feel you can live with; future buyers may be turned off by it. Consider crime rates, taxes, transportation, town services and the local zoning laws.
Look for a neighborhood where prices are increasing; never buy the most expensive house, buy at the bottom because as the prices of the better homes increase, the value of the lesser homes will rise as well.
Can you presently afford to buy a house? Can you obtain a mortgage if the cost of the house is more than three times your annual household income? The mortgage company will hold your monthly payments to approximately 20% of you salary. Little debt and a larger down payment will qualify you to buy a more expensive home.
Considering that a home mortgage is one of your largest investments, approach it in a pragmatic manner and be conservative. First this is your home, your nest, your abode, etc. and an investment second. If you are betting on the future and over-buying, you stand a good chance of losing it all which would limit or maybe even prohibit future purchases and cause your credit rating to be marred as well as hiking future interest rates on all borrowed funds.
Investment counselors may be advising you to buy the largest house that you can afford, pay as little down as you can, and stretch out the payments for as long as you can. Note the foreclosure rates during 2010, so I say to put as much down as you can, buy a house well within your means in a good location, and try for a 15 year mortgage in order to get the best interest rate. If you feel this is too big a bite, you can accomplish the same goal by taking out a 30 year mortgage and making two full payments each month. You may pay a little more in interest but should you fall on hard times you can always revert back to the required payment; however as soon as you can, apply discipline and return to your game plan.
If you decide not to retain a broker, here are several tips you should follow as you pursue one of the biggest purchases in your life. Ask for a Good Faith Estimate (GFE) from your Lender. A GFE is a schedule of fees, or closing costs that you will be charged with at closing in addition to your down payment. If you are short on cash, try negotiating with the seller to pay some of the closing costs. This is not an unusual request for buyers to ask and the worst case scenario is that they will just say no. Another option if you are short on cash is most lenders will permit you to roll closing costs into the mortgage, however you will have to pay a higher interest rate on the loan, perhaps 0.25% or 0.50% higher.
Buying a house is a legal action requiring your signature on legal documents and a mortgage note. If you have retained a broker, he is qualified through training and licensing to advise you and to protect your interests. If he were to breach a trust to the buyer or seller, he would stand to lose his real estate license. If you don’t have a broker or if you feel uncomfortable about what you have been told or read, you will want to retain a lawyer to review all written documents prior to closing.
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