Buying a home is one of the top investments people make in their lifetime. It is important to cover all your bases when it comes to such a big decision so make sure you align with the right people to guide you through the journey. Here are 5 things every home buyer should keep in mind…

1. Get Finances Situated Early7-things-home-buyers-hate
If someone educates themselves on the loan and home buying process early, then they have time to improve all factors that determine their ability to obtain a great mortgage loan.

One important aspect, when it comes to acquiring a loan, is credit. A credit score reflects how much money you owe, how often you use credit, and whether bills are paid on time. Lenders look at factors called the four C’s of credit:

  • Credit history (bill paying on a timely basis)
  • Capital (down-payment money availability)
  • Capacity (income vs. debt)
  • Collateral (the condition and value of a home)

It is imperative that prospective buyers recognize what a lender is looking for. If a future purchaser keeps these four C’s in mind months prior to house hunting, it could definitely improve their future loan.

One of the worst things a person can do is to avidly look for a home, in their agreed upon price range, before the pre-approval process is complete. Falling in love with a home and missing out on it because a loan was not secured beforehand can only leave you heartbroken. If one takes the time to get financing in order before the house hunting begins, the process can run so much smoother and they won’t be living in fear of losing a house they adore!

2. A Down-Payment is Never a Bad Investment
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Whether it is a renter converted to a buyer or a buyer who qualifies for various type of loans, down-payments are crucial for stability and having instant equity.

It’s incredible that many people don’t realize that a down-payment can be very comparable to getting into a rental home now-a-day. As of late, rental inventory is low which hikes up prices for everyone. To get into a rental, first, last, and a security deposit that matches the monthly rent is usually required at move-in. Not to mention an additional pet deposit too for the four-legged child! Just think of a rental home that is $2,000/month…

$2,000 first month + $2,000 last month + $2,000 security deposit + $250 pet deposit
= $6250 move-in cost

A down-payment can be equivalent, depending on the price of the home. Buying is investing in your future while renting is literally throwing away your money each and every month. That’s cash you would never see again.

Some people are able to qualify for different loans that require diverse down-payments. An example would be someone who is able to use a VA loan but also has the ability to put down 20% on a Conventional Loan. Not only is putting some money down a good idea for any homebuyer because it minimizes risk and lets you start off with some equity, but it makes an offer look much stronger. Just recently, a VA-loan buyer of mine put a solid offer that was $10,000 more than asking price on a $479,000 home. The seller chose an opposing offer because they had a 10% down payment opposed to my buyer who had a 0% down payment due to his VA loan. It shows less risk of financing falling through which would allow the deal to go smoothly. Just something to keep in mind!

3. Carefully Select Location

It is vital to research nearby schools, property tax rates, insurance rates, and crime statistics in prospective homes. Even if you don’t have kids, it is definitely a good idea to check out a neighborhood’s school district before buying the home. Living in an area with a desirable school district raises the property’s value which is stellar for re-sale purposes. Buying a home is an investment, so the neighborhood is a major element in determining how good of an investment it really is.

4. Inspection is Critical home-inspection

As I have previously stated, buying a home is a HUGE investment. You’re putting tens to hundreds of thousands of dollars into this property. You don’t want to get stuck with a money-pit. It is important to dig deep and take advantage of the inspector’s knowledge. If a problem pops up during your inspection, it is always a good idea to take a closer look. You can leverage the needed-work with the seller, as well. It’s okay to ask for financial compensation or for repairs to be made prior to move-in. The home is still up for negotiations during and after the inspection –and chances are, those things need to be repaired no matter who the buyer is. Use the inspection report to your advantage. Also, keep in mind that staying under budget when buying a home gives you extra cash to add the upgrades and fixes. No one wants to be house-poor.

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