1. Do Your Research
Most likely a home purchase is one of the largest purchases you will make in your lifetime. Any large purchase should involve extensive research through professional venues and on your own. Begin your research with establishing a thorough knowledge of the buying process, pricing and your projected purchase area. Know the communities in which you are interested along with specific properties you admire in order to move forward with a wish-list and the confidence in knowing what you want.
2. Why Working with an Agent Saves
If you are a real estate professional or have extensive knowledge to the point you can successfully navigate the purchase process, then by all means, proceed. However, it cannot be stressed enough that navigating a real estate deal without a professional agent or prior experience in real estate can be a financial burden and stressful situation to say the least. Even though an agent will receive a commission on the sale, this commission is most likely much less than the potential money lost through inexperience and negotiating a sale on your own. An agent will help you to find your way through the web of paperwork, placing offers, negotiating final prices and leading you through closing costs.
3. Get a Loan Pre-Approval
This step is extremely important. If you do not get pre-approved for a loan then you may find a home of your dreams and not be able to proceed due to a loan that is not approved too late in the game. This helps you to set a price and move forward with a financially sound purchase. When it is time to acquire a loan, shop around for a lender that offers you an interest rate you are pleased with since it will be with you for quite some time. There is nothing wrong with speaking with several lenders. After you are pre-approved make sure to pay close attention to your finances and do not make any rash decisions or large purchases until after the purchase of your new home. This is incredibly important especially around the holidays when you are most likely spending more than normal.
4. Know Your Budget
After pre-approval you will be more familiar with a price range to work with. It is good to know a range within you can begin your search and that you are comfortable with. This budget will need to take into consideration not only the price of the home, but also HOA fees, closing costs, insurance and costs incurred throughout the move. Sticking to a budget is good financial practice, but also key throughout the home buying process. If you don’t look at homes that are out of your price range then you will not get sucked into thinking you can “make it work.” Remember that this purchase will follow you for years down the road. Make sound investments that work with your budget and equity will follow, if you over-purchase though it can end up hurting you in the long run.
5. Create a Realistic Wish List
Once a budget is established, your wish list is much easier to build upon. This list should include wants and needs, but most importantly it needs to capture a complete picture of the home and community you are looking for. Start big with the non-negotiables such as the specific communities you want to live in, the number of bedrooms and bathrooms you need, what style of homes you are interested in looking at, whether or not you need a garage, etc. After the larger must-haves are established it is easier to understand what is negotiable in the long-run. Don’t be afraid to wait until a home comes available that offers everything you need, but understand every home no matter how long you wait may not have everything you want. This does not mean you cannot work future upgrades or improvements into the final price of the home through negotiating with the help of an agent.
6. Find a Reliable Home Inspector
Good home inspectors are on the same level as a good real estate agent. Imagine closing on your home, the process is finally over and then there is a leak in the basement, or the roof, or the electrical begins to malfunction. In order to avoid any pricey mishap research and procure an excellent home inspector since they will make sure if your dream home is in fact a safe place to live and a sound financial investment. Make sure your inspector is not only certified, but is also affiliated with a professional home inspector organization. Another point of conversation with inspectors is to procure an actual written report at the end of the inspection and not simply a check-list. We suggest going the extra step and being present for the inspection itself, you should not work with an inspector who is wary of having you there throughout the inspection.
7. Understand All Costs Involved
Buying a home is not just a down payment and closing costs. Before beginning the process sit down and compile, along with your home budget, a list of closing cost fees and payments. On top of these costs there are also costs incurred post-purchase such as HOA fees, home insurance, taxes and maintenance. Some types of insurance for example are more important in certain areas of the country than others. For example, wildfire or flood insurance may be a good idea in some parts of Montana whereas in other parts of the country tornado insurance is stressed.