Eight House Buying Tips
There are entire books written about buying a house. Here are a few tips to help you get started.
1.) Find your budget and stay within the limits. Don’t think you can afford “just” $100 more per month. The danger for going just a little bit over is that it all starts to add up. “Just” $100 more works out to $1,200 in a year, $6,000 in 5 years. That $100 may become important if utility costs go up, property taxes are raised, or you run into some unexpected repairs.
2.) Get pre-approved for your mortgage before you start. This helps you determine your price range, which will eliminate the heartbreak of finding out you can’t afford the dream home you’ve admired for three months. It also helps your REALTOR® find homes in your range, and gives you some serious bargaining power when you finally make an offer.
3.) Use an experienced real estate agent. See our blog post on the importance of working with an experienced realtorInterview your prospective agent and see if they’ll be a good fit. It’s important to find a REALTOR® who is experienced and will work on your behalf, not the sellers.
4.) Shop around for mortgages. There is more than one bank, more than one mortgage broker, more than one lender. Just because one won’t let you do things like folding repair costs into your mortgage doesn’t mean the others won’t. Find one that will give you the terms and conditions you need.
5.) Foreclosed houses aren’t always a good option. Many times, the previous owner took the attitude of “if I can’t have it, I’ll make sure it’s hard for the bank to sell it,” and seriously damaged the home. Foreclosed homes that are in good condition aren’t necessarily lower in price, and ones that are very low in price usually had some very extensive and expensive damage done to it. In some cases, the banks will lower the price to cover the cost of repairs. See if you can get the repair costs folded into the mortgage.
6.) Use a licensed and accredited home inspector. Don’t get your dad or your buddy to check it out. Get a licensed inspector who has experience in home inspecting and/or construction. Look for problems with plumbing, leaks in the roof, electrical problems, and any old or outdated mechanicals like the furnace and water heater.
7.) Don’t look at flaws as a reason to avoid a house. In some cases, things that need to be repaired or updated can help you get the price lowered. You can ask the seller to pay for repairs, or at least put the repair money into escrow so you can pay for them after the sale is complete.
8.) You could always include the repair costs into the mortgage. This can be important if you’re buying a foreclosed home and trying to pay for damages the previous owner made while they were moving out.