Thinking about buying a home? Check out these important tips to help you get started...
1. Do some research
Sounds obvious right? But so many buyers go into it blind. Although there are many professionals that will help you along the way, you will only help yourself if you do a little research before and during your home buying process.
So what kind of research? Use the internet to...
- Search for neighborhoods
- Research home styles
- what you might like or dislike in your next home
- school districts
- neighborhood features
- different activities in these areas
2. Have an idea of what you are looking for
After you do some research, make 3 lists...
List 1: What you HAVE to have
This is everything you can not live without. For example, if you have 3 children you might HAVE to have a 4 bedroom home.
List 2: What you would LOVE to have
These things are not necessarily a deal breaker, but would be nice to have. For example, an inground pool or a finished basement with a movie theatre.
List 3: What you DO NOT want
This means if a home has anything of these features, you will not purchase the home. For example, right next to the freeway or train tracks or maybe it has a pool and you don’t want the hassle.
Having these lists will not only make your life easier, but it will allow your real estate agent to show you the homes that best fit your wants and needs. Even the most experienced real estate agents are not mind readers, show them and tell them what you want so they can help you find the perfect home.
3. The Cost
There is more to buying a home than just the purchase price. Closing Costs, Inspections, Appraisal, Moving Fees, Homeowners Association, Homeowners Insurance, and other fees are often a surprise to unprepared buyers.
Closing Costs - Before you get the keys to your new home, a title company needs to complete a few tasks. Tasks like making sure the title is free and clear of all liens, order a survey of the property, record the new deed, and more. Closing costs depend on the terms of your purchase, the state and area you live in, etc.
Inspections - After your offer is accepted, typically you have a negotiated inspection period where you can inspect the property for any damage or repairs needed. Typically a Home Inspection, Pest Inspection, and Radon Test are completed. After the general Home Inspection you might have a specialist inspect specific elements that need further investigation such as the foundation, lead base paint, etc. Inspections can run you $250 and up, just depending on what inspections you have done. We highly recommend you have a home inspection before purchasing any property!
Appraisal - Even though your real estate agent will pull comparables of the property before you write the offer, after the offer is accepted an appraiser is hired by the bank to determine the properties value.
Moving Fees - Seem obvious, right? Obvious but often forgotten, make sure you factor in expenses for a moving truck, taking off work, hiring painters or getting new carpet. Give yourself an estimated budget and plan to save that chunk of money for your moving expenses.
Homeowners Association - If the home you are purchasing has a Homeowners Association, make sure you know what the fees are and if they yearly or monthly? Make sure you check to see if there are any transfer fees or “new owner” fees. Sometimes there might be a transfer fee from one owner to the next.
Homeowners Insurance - This is obtained before closing, but it is an expense you need to have on your list. Talk to your insurance agent and get quotes from several companies to find the best fit for you.
4. Build a move in fund
Okay, you have found the perfect home and it’s time to start decorating! But you just spent a good chunk of your savings on your down payment, inspections, closings costs, celebrating at an expensive restaurant, and you don’t have much money left. Don’t let this be you! Make sure you budget and save a good amount to help you hire a moving crew, paint, buy furniture, and for those unexpected things that could happen after moving in.
5. What a Loan Pre-Approval gets you
Typically when you write an offer on a home, you will present your loan pre-approval letter. This means you have spoke with a lender and they have ran your credit score and information to determine that you are pre-approved for a home loan. You will not be fully approved until a loan application is filed and processed. This does not happen until your offer has been accepted on a home and you go into contract.
So what will a pre-approval get you? You will be able to learn about your options when it comes to choosing a loan and how much money you need to bring out of pocket. This is your time to do some research to make insure that you choose the right loan for you.
6. Know the programs (203k, OHFA)
Are you a first time home buyer? Do you want to get a loan that will help you rehab your next home? Are you a resident fresh out of college, in debt with school loans? Whatever your situation, make sure you know your options. When it comes to buying a home, hire a lender and a real estate agent who know how to help you with your unique situation.
HUD 203(b) loan - FHA will provide 97% of financing, and most closing costs can be included in the loan. Contact a lender for details and restrictions.
HUD 203k loan - Offers a solution for a typical fixer-upper where you can roll costs of fixing up a home into your loan. Contact a lender for details and restrictions.
“Doctor” loan - If you are graduating medical school, chances are you have a lot of school loan debt. To lenders, debt like this will never let you buy a home. However, with this “Doctor” loan program, you can still buy a home! Contact a lender for details and restrictions.
OHFA - A program offered in Ohio to help First Time Home Buyers. You must be a first time home buyer and meet certain criteria. It offers down payment assistance opportunities and more. Contact a lender for details and restrictions.
7. Foreclosures and Short Sales
When buying a home, you will likely come across a Short Sale or a Foreclosure (Bank Owned, REO).
Foreclosure - A home that is owned by the bank after the previous owner stopped making payments. These properties are typically listed at or under market value based on the the selling price of other homes in the area and the condition of the home. Foreclosure do not take as long as short sales and are almost always sold at an ‘as-is’ condition. You can still have an inspection but the bank will typically not make any repairs.
Short Sale - A home that is in or close to foreclosure, and the homeowner is trying to sell the home to a new owner for less than they owe on the property. This is where the term “Short” sale comes from. Typically a short sale can take up to 6-12 months to close. This is a long process because the homeowner is negotiating with the bank to take a loss of the property in order to avoid foreclosure.
You can get a great deal on some foreclosure and short sales, but make sure you are aware of the timelines and the terms.
8. School districts
Whether school districts are important to you or not, this is a huge resale point. Take school district rankings into consideration when searching and purchasing your next home. You can go to the Ohio Department of Education’s website, www.ode.state.oh.us to get the most recent score and evaluations of every school district in the state. Living in a great school district can make the area more appealing to more buyers. Living in an area with a low scoring school district may or may not deter buyers. Talk to you real estate agent to get the details.
9. Know who is representing you
Anytime you start working with a real estate agent in Ohio they will present you with an agency relationship document called a “Consumer Guide”. This document explains what Buyer’s Agent, Seller’s Agent, Dual Agency, and more mean to you during the home buying process. Make sure you understand these terms and how they affect you. Having a real estate agent representing you means they are looking out for your best interests and have a fiduciary duty to you and only you.
10. Understanding Market value
When it comes to purchasing a home, your real estate agent will help you determine the market value of the home. In other words, what the home is worth in today’s market. Market value is constantly changing. What your home is worth today may not be the same a year from now. You can see what the market value of a home is by pulling what is called a “comparable market analysis”. This is where the sale price of comparable homes are pulled and compared to the home of interest. This should be done by your real estate agent before you write an offer on a home. The true value of your home is determined by an appraiser. The appraisal is ordered after you go into contract on a home during the loan process.
No comments:
Post a Comment