Purchasing a New House
For most of us, buying a home is the biggest purchase of our lives – and the process is far from simple.
1. Check your credit score and watch your cash flow.
Start by checking your credit score. “It is more, the higher the interest rate on your mortgage,” writes Ramit Sethi in “I’ll teach you to be rich.” Good credit can mean monthly payments much lower, so if your score is not very large, consider delaying this big purchase until you’ve created your credit.
Regarding the monthly payments, experts in personal finance say a good rule of thumb is to ensure that the total monthly payment does not consume more than 30% of their net salary.
It is also an advantage to plan to be in this house for some time – at least 10 years, Sethi recommended. “The longer you stay in your home, the more you save,” he says. “If you sell through a traditional realtor, paid to that person a huge tax. – Generally, 6% of Divide selling price that just a few years, and he hits a lot harder than if he had kept the house for ten twenty years “. Not to mention, moving costs can be incredibly high.
2. Have the money for the down payment.
Technically, not always having to put money down when financing a home today, but if you can not afford to put at least 10% down payment, you may want to reconsider the purchase, Sethi said.
Ideally, you’ll be able to put 20% – anything lower and you have to pay private mortgage insurance (PMI), which is a safety net for the bank if you do not make your payments. PMI can cost between 0.3% and 1.50% mortgage, depending on the size of your down payment and your credit rating.
3. Planning of surprise expenses.
Even if you can afford the monthly payment, be aware of hidden costs. Buying a home means property taxes, insurance, and maintenance fees that can add hundreds of dollars per month.
See The New York Times “Is it better to rent or buy?” calculator, which takes into account such things as maintenance, renovation, closing costs, taxes, inflation and the cost of buying and selling, to help decide if you want to rent or buy what makes the most sense for you.
4. Get pre-approved for a mortgage.
Once you have aligned their finances and decided to invest in a home that is feasible, determine how much you can spend and stick to that limit.
David Walker and Philip Lang, co-founder of real estate brokerage services Triple Mint, recommend getting a pre-qualification letter from a mortgage lender before house research, which shows that you, your agent, and how sellers can afford. When multiple offers examination, sellers will probably make an offer to those with a pre-qualification letter before those who do not.
To apply for prequalification, you need to find a lender – either the bank or a mortgage broker. Compare bank deals and a couple of mortgage brokers before deciding on the right lender for you. Remember, though: You do not have to spend every penny to which it is approved. Usually, it is a good practice to target a home that costs less than the maximum amount to which you are entitled.
5. Finding the right Realtor for you.
“Look for a realtor who aligns with your goals. This will achieve the best results for you, “says Walker. “If you’re an investor to buy an investment property, you could be looking for a line of different personality and a different type of agent if you buy the main house and the largest school district.”
Mesh with your agent and make sure they understand your needs, you can pay big dividends over time. “We have seen great success with agents who are paid bonuses based on customer satisfaction and no commission. It changes the dynamics completely,” Walker said. “Find a real estate agent puts customer satisfaction as the top priority. ”
You will spend a lot of time with them, it is useful to put in the time and effort to find the right agent. Reach out to friends for recommendations and interview several coffee options to determine their level of experience and expertise in the areas where they are interested.
6. Start the hunt for places within your price range.
Start by determining your overall needs – to live, the number of bedrooms and bathrooms you need, and some school districts that are trying to find.
Then you become your own expert, said Lang. “Technology has allowed people like never before to do a lot of research online, and really understand the market before going in person by the kind of person who is very active in research, it has never been a better time to find a home. the data is there. can really become your own expert on the market and stocks. ”
Zillow.com offers house prices across the United States, and Insure.com give home insurance quotes and allow you to compare prices.
Also, check if there are benefits to the government and your employer. Many states offer benefits if you are a buyer of a first time, and some employers offer lower special rates for first-time buyers.
7. Look ground before going out to see properties.
Do not be fooled by the photos, and Lang Walker said. If you see pictures of an apartment or a house and the shutters are closed, the more likely is that the view is not great, they explain. In addition, some camera lenses can make space seem much larger than they really are.
“A floor plan is never found,” Walker said. “When purchasing, you will make your own space, so it is important that the floor plan design – physical space -. It works for you ”
If you work, then take the time to get out and see the property in person.
8. Put in an offer that is comfortable.
You want to ensure that the home meets the basic requirements before making an offer. “Buying a home is an emotional process,” Lang said. “It is important to remain rational and stick with your limit price when shopping. A lot of times people get caught up in a bidding war, and will step on what your price should be because they like the house so much. ”
Not only make an offer because you are emotionally exhausted and desperate to complete the process. Expect to lose a few houses before finding one that says, Walker and Lang. While it is possible that your dream home in a few weeks, could also take six months or more – to prepare for a long and tiring process.
If you found the right one, quickly make your offer. It may not have much room to negotiate down the price or because he is likely to face rival bids. “What people are competing in is that he is more qualified to buy it,” says Lang. “It is not always the highest price bid is accepted. Sellers are really looking for the certainty of closing, so if you can provide more certainty on the seller, who are more likely to accept your offer. ”
If the seller accepts your offer, you sign a contract before the closure, and the agreement will be subject to obtaining a loan with your lender, get the home inspected, and make an inspection 24 hours before closing.
Be prepared for closing costs such as appraisal fees, legal fees, title insurance, taxes, property transfer and inspection fees, which add up to about 5% of the amount of ‘mortgage.
closing customs vary depending on the state where you buy your real estate agent or attorney will be able to explain.