Homebuyer’s Tips: Know Before You Go
For the majority of people, buying a home, especially a first home, is a terrifying step in life. You are about to put your entire life savings into one, single item. You can make this process go all the smoother by arming yourself with the necessary information as well as following these tips.
- Save Your Money - You need to plan ahead and start saving your money as soon as you begin dreaming about buying your own home. You’ll have to pay for a number of items including a home inspection, appraisal, loan officer fees, pro-rated property taxes, a down payment (usually between 3 and 20 percent of the purchase price) and one year’s hazard insurance premium, in advance. These costs can and do add up quickly, and you'll need to be prepared for any unexpected cost well before you reach the closing table. Also keep in mind that most lenders require that homeowners have three months of living expenses available after closing on the loan.
- Get Pre-Approved - Talk to a mortgage loan professional before you go to look at properties. Residential mortgage loan approval depends on the borrower’s work history, credit score, income and debt. The loan officer will talk to you about your background and then retrieve your credit report. If you’ve recently graduated from school, you may have to wait to purchase a home until you’ve completed two years of continuous, full-time employment. If your credit score is less than 640, you may not be eligible for a loan. Ask the mortgage professional how you can raise your score. If your income is high enough to comfortably pay your monthly creditors, the loan officer may give you a pre-approval letter that states the purchase price (how much you can spend), loan amount and type of loan that you can likely obtain. Don’t waste your time looking at homes that are priced significantly higher than that amount. Some realtors may not even want to assist your search unless they know you have been pre-approved for a mortgage.
- Search the Internet - Get familiar with neighborhoods and price ranges by searching for listings on the Internet. Some web sites may have outdated or incorrectly advertised properties, but sites like KeystoneRealtyUSA.com are current, local to Long Island and up-to-date.
- Find an Experienced Agent - Keystone Realty USA has professionals on staff that can help you. You can also search the Internet and call the agent who’s advertising a listing you like (chances are they handle multiple properties like the one that interests you). Ask your friends and neighbors for the names of people they recommend. Everybody has to start somewhere, but you don’t want to be anybody’s guinea pig. Interview a few professionals and don’t be afraid to ask them about their background. Pick one that has significant experience because there’s a lot to learn about contracts, inspections and negotiations; all of that takes time to master.
- Request Seller Concessions - Your real estate agent will help you complete the paperwork for the purchase offer. If a seller is highly motivated to sell, he or she may agree to pay a certain percentage of your closing costs; this is known as a 'seller concession'. Ask your real estate agent if it’s an appropriate tactic for a particular property and/or if the current market conditions will allow it. You never know and you might just get lucky and save yourself some money.
- Get a Home Inspection - Always hire a professional to inspect the home’s roof, foundation, electrical system, plumbing and major appliances. If the property is in an area that's susceptible to damage from termite or carpenter ants, hire a licensed pest inspector to search for signs of live infestation. The seller may be obligated to pay for repairs and extermination services; check your contract. If the damage is extensive, you may have the option of canceling your contract which is an excellent negotiation tactic to ensure the seller makes necessary repairs.
- Obtain Title Insurance - Title insurance protects you, the buyer, from past defects in title including forged documents and undiscovered liens (debts guaranteed by the value of the home). It’s a one-time charge at closing, and you should always obtain it. The seller typically pays for it in many parts of the country, but anything is negotiable.
Every situation is different when it comes to buying a home. Keystone Realty USA has over two hundred (200+) professionals on staff that can help you through this challenging endeavor. Contact us today if you are considering buying a home or if you are thinking about beginning your search.