Are You Ready To Buy A Home?
Buying a home can be overwhelming. Where to start? I hope this helps you a little. Buying a home is exciting. I hope these tips here help you to get started.
- Get Pre-Approved for the Loan
I recommend strongly to talk to a lender 1st. They determine how much home you can get qualified for and if you are ready to buy once they pull your credit scores and get information from you to determine whether or not you are ready and how much you can buy . If you select to work with me to represent you I will be at your side throughout the process beyond closing if you need me. I have lender contacts and I have all contacts you need for a smooth transaction, also if you like to buy a new home. I don’t recommend that you start looking without a pre-qualification first.
- Establishing a Realistic Price Range
To find out what you are comfortable with in a mortgage payment make a list of all your monthly expenses, except rent or your current mortgage payment. You want to save money for emergencies and also think ahead for retirement. By getting pre-qualified you won’t look at homes that are not in your price range. It is easier to go up in price if you can than to go down. It is disappointing to you because more expensive homes have in general more things you may like and want. I have also addressed Needs & Wants a little further down.
Once you are pre-approved it is easier to find the right home and community for you. You may know or have an idea what kind of community interests you. When we write an offer we will need a pre-approval letter for the seller to show that you are ready and able to buy and close. It makes you look stronger and prepared. That is very important as there could be another buyer making an offer on the same home at the same time. You are in a stronger position to negotiate for the price of the home.
Getting pre-approval if very different from a pre-qualification. With a Pre-approval the bank/lender can write a pre-approval letter, not with a pre-qualification because they have no information from you. Lenders get detailed information from you and look at your credit history as well as your debt and income. Going on-line to do that (which many buyers do) does not mean you are ready to buy or get a loan. They have different results pulling credit scores than when you do it. They also look at your debt. Lenders are very competible with their rates today.
- Set Priorities
I recommend that you make a Wants & Needs List. If you are a couple you each should each make a list to compare. Needs can be: style of home (1 story or 2 story), number of bedrooms, square footage, high-quality schools, garage, construction, age of home, schools and commute time. These needs are what you don’t want to change or be flexible on, it may also make no financial sense. Wants are things that you would like and would be nice to have such as a pool or community pool, FROG Finished Room Over, Open Floor Plan, hardwood floors, Granite Counters, screen porch, etc. The list helps you put things in prospective and decide eventually what you will compromise on or add later after closing. Making a list helps you focus on what is really important in the house you want to buy and it narrows the list of prospective homes. Sometimes the new house will include most of your needs and a few wants. The list is important especially if you are moving from a different state or part of the country. Here in South Carolina for example we have very few homes with a finished basement which people from the North or Midwest love. We have FROGS in the Columbia area and perhaps some walk-out basements.
- Find the Right Neighborhood
I encourage buyers to drive through the neighborhood they want to purchase the new home in at different times of day to get an idea of the area, also talk to a neighbor if you see one outside. They know it and live here. They can be helpful to determine if you want to live here.
You may check out Crime statistics, insurance rates, find out the property taxes and school quality if that information is important to the decision making to you. I keep resale in mind for you when you look at the home you want to buy. Neighborhood is part of a home’s value. I won’t rush you into making a decision, I assist you in making the right decision for you. I ask you about your commute (you want to consider traffic), point out amenities the neighborhood may have for you to enjoy, shopping, churches, recreation and more.
Once the offer has been accepted you need a licensed home inspector. I also recommend an inspection when you purchase a new home. I promise you they have found things I did not see or could not see. Ask them questions as to what they all inspect so you know if you need to hire an inspector that specializes in something he does not inspect. Here in SC you receive the full report immediately if you have paid for it, in general by email. The agent gets a copy too so you can discuss any corrections that’s need to be made prior to closing. The home inspection should include construction, foundation, plumbing, electrical, heating and cooling systems. We have certified Heating & Cooling Inspectors in SC. We also have Termite Inspectors, there is Mold and other inspections. If the inspection uncovers serious issues like cracks in the foundation, the buyer may decide not to go through with the contract or ask the seller to repair the problem by a licensed contractor.
The bank sends out an appraiser to appraise the house. The contract will be contingent on it. It has to appraise for the sales price or higher of the price needs to be negotiated again unless the buyer has access money to put down. It happens sometimes that it does not appraise if you find a house that is not like any other, but it has been my experience it generally appraises for a little more than the sales price. This will be part of your closing cost to obtain the loan. The lender asks for this money when they ask for a loan application fee.
- Closing Cost
Closing cost is the cost to obtain the loan. It is a buyer’s responsibility. Buyers that may not have enough to cover their down payment and closing cost ask the seller for assistance. I call it what it is, that buyer finances his closing cost into the loan. There will be loan origination, interim interest, attorney fee, title insurance the bank requires and owner’s title insurance for the money you put down. Title insurance protects you against defect of the title. You should keep that policy in a safe and not destroy if even after you sell the house. If anything is ever questioned about the title you paid for insurance to cover it. Included in the closing cost are Pre-Paids. That is what the lender collects for your escrow account: Home Owners Insurance (they pay it after the first year), 1 year Home Owners Insurance, Taxes to be paid at the end of the year, Private Mortgage Insurance PMI if you don’t have 20% down payment (VA Loans have a Funding Fee financed into the mortgage). There are so many different loan programs available again that may not have PMI.
Rosemarie Averhoff, CRS
Broker Associate, e-PRO Certified Internet REALTOR
ABR Accredited Buyer Represenative
CRS Certified residential Specialist
CSP Certified New Homes Specialist
CSP – GRI – Certifed State Housing REALTOR
RE/MAX Metro Associates
7321 B St Andrews Rd.
Irmo SC 29063
(803) 629-8844 Cell Phone
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