Jen Jones
Buying a home can be a stressful time as it is one of the largest financial investments you will make. While preparing for the home buying process, there are a few points to keep in mind, including your financial situation, the current housing market, and the type of real estate listings.
Tip #1- Check out Your Financial Situation
Before you start on the home buying process, you need to make sure you have your finances in order. This is important to do because you will need enough money to pay both a down payment and closing costs on the house. The down payment is typically 15% of the home value, and closing costs are normally 5% of the property price.
The best way to find out how much you can afford to pay for the down payment and closing costs is to prequalify for a loan. Once you have this amount written down and you start the home search, this will indicate to the seller that you are able to buy the property. You should get an estimate by researching the market before you look for a home to find out approximately how much money you need when you sign the paperwork.
Tip #2- Research the Housing Market
Researching the housing market is a vital step in the home buying process. This will allow you to find out current
mortgage rates on different types of home loans as well as average monthly payments on these loans in order to determine what you can financially afford to pay on a monthly basis. You should also take the time to think about what type of house, specific features, and the location you want the home to be in, and see what these houses are being sold for.
When researching different home loans, you should budget approximately 25% of your monthly income to be set aside for the mortgage payment. You might want to use a
mortgage calculator to figure out what your monthly budget is. Before you fill out a home loan application, examine your credit report. If there are any errors on your credit report, you may run the risk of an increased interest rate.
Tip #3 - Look through Real Estate ListingsTake advantage of real estate listings advertised on the Internet and in newspapers to find a house for sale that has the qualities you want, while still being in your price range. Aside from shopping for homes for sale by the owner, you can also see listings for foreclosed homes and new homes that have recently been built.
Be cautious if you are considering buying a home sold by its owner. Homes for sale by owner often provide downfalls for the buyer, primarily being that the homeowner generally overprices their home. They tend to believe that their home is worth more than other homes in the neighborhood and price it as such. You may also feel uncomfortable discussing the pros and cons about the home with your agent (or spouse) if the homeowner is present.
Shopping in the
foreclosure listings for a home can be a good way to purchase a home in an ideal neighborhood for a lower value. Unfortunately, you are typically not allowed to inspect the home before purchasing and you will be buying the home as-is. This can be a downfall if the previous homeowner damaged the house, refused to fix a malfunctioned appliance, or the home has squatters living in there. Unless you are willing to risk these conditions, the lower price may not be worth the cost in repairs and replacements.
Buying a new home is a great option for you when searching for a house. Since it is newly built, all appliances will be brand new and under a new warranty, there will not be stains on the carpet, and the landscape will not be overgrown. Another plus to a new home lies in the fact that it will be built to current code regulations, which is important if you live in a state that is at risk of environmental disasters such as hurricanes or earthquakes.
Remember that you will be with your home for the years to come, so make sure it has everything you want. Once you have your financial situation in check, a firm grasp on the
housing market, and clear knowledge of the type of home you plan on buying, you will be ready to start the home buying process.
