With interest rates and housing prices at an all time low, foreclosures on every corner, and government incentives about to end, you (or someone you know) might be looking to buy a home. How exciting! But, in this market, no one can afford a home-buying mistake.
Although this article is especially designed to help those first time buyers who are new to the process, these five essential tips will ensure everyone a successful home-buying experience. Sell my home fast in Bronx
1) Work with a Full-Time Licensed Realtor
Real estate agents have training and experience with all types of homes including condo’s, co-ops, short sales and foreclosures. And they understand various forms of mortgages, including FHS, VA, Conventional, and HELOC’s. Agents understand trends in the market and can highlight the differences between competing neighborhoods. They can also connect you with reliable specialists, like home, pest and radon inspectors, as well as mortgage lenders and closing officers. Plus agents have access to thousands of available homes through the Multiple Listing Services in your area.
In addition, your agent has been trained in negotiating techniques, and will be there for you when a problem arises. I’ve been in real estate since 1986 and have never once seen a deal that didn’t depend on the outstanding negotiation skills of an experienced agent. And I’ve never had a closing without at least one tiny issue going awry. Buying isn’t as easy as some might think. A good agent definitely earns his or her commission.
But the best news is buyers don’t pay for all that expertise. That’s right. The seller pays the commission. Real estate practices vary from area to area, and ALL things in real estate are negotiable (yes EVERYTHING) but generally it doesn’t cost a buyer a cent to benefit from the knowledge and expertise of a well-qualified, licensed real estate agent. And the agent you hire works for you. So why not hire one! (If an agent is working for both you and the seller, that’s called Dual Agency and it must be disclosed up front.)
On the other hand, keep in mind the agent who initially shows you the property is the one generally entitled to the commission. So before you start wandering aimlessly through open houses, interview perspective agents and select one you like and trust. Here are five questions to help you decide if an agent is right for you:
*What do you do better than other real estate agents?
*How will you help me find the right home for my wants and needs?
*What are the most common things that go wrong and how do you solve them?
*What are some of the mistakes people make when buying their first home?
*Can you provide me with references or testimonials from recent clients?
2) Location, Location, Location
I’m sure you’ve heard this mantra before. Don’t underestimate its worth. Research all the areas where you might want to live. Weigh the pros and cons. But always choose a neighborhood that’s up and coming or, over time, has held its value. Although most real estate has recently adjusted, some areas hold their values better than others. You don’t want to invest your hard earned money in a location that’s declining. And you definitely don’t want to get stuck with a home you can’t resell.
3) Know What you can Afford and Stick to your Budget!
Don’t let buying become an emotional decision. NEVER buy something you can’t afford just because you were swept away by someone’s furniture or decor. Meet with your agent and a reputable mortgage lender (or 2), in advance, get pre-qualified (which will also make you a stronger buyer), and understand all the costs associated with buying a home and buy what you can comfortably afford. Here are some buying costs you want to investigate.
Get educated about the 28/36 approval ratio (often called front end and back end ratios), which means your house payment, principal, interest, taxes and insurance (PITI) shouldn’t exceed 28% of your gross monthly income, while your back end ratio, PITI plus fixed debts, school loans, car payments, and 10% of total credit card balances, shouldn’t exceed 35%.
Learn about closing costs and pre-paids. Closing costs are the one-time costs associated with the purchase of your home. These expenses vary geographically and can include appraisal reports, surveys, credit reports, title insurance and other expenses associated with a mortgage or home purchase. Prepaids are collected to set up an escrow (savings) account so that when taxes and insurance bills come due your mortgage company will have enough money to pay them for you. If your escrow account is short (under), you’ll usually have the choice to write a check for the full amount or have your mortgage payment increased. If your escrow account is over, you can allow the money to sit there or have it refunded. Since escrow accounts generally pay little or no interest, I suggest having it refunded.
PMI (Private Mortgage Insurance) is another purchasing expense you should understand. If your down payment is less than 20%, in most cases, you’ll be charged a one-time PMI fee, plus ongoing monthly fee until your home appreciates or the principal mortgage balance dips below 20%. At that time the PMI doesn’t automatically fall off your payment. You must contact your mortgage company and take whatever steps necessary, like another costly appraisal, to have it removed. If you can, avoid this expense from the get go.
4) It’s not the Purchase it’s the Carry
Besides knowing the cost of purchasing a home, understand the ongoing costs of ownership. For example if you’re considering a home with lots of open spaces and high ceilings, your heating bills might be higher than average. If you’ve fallen in love with an older home, you might need to set money aside for future repairs to expensive mechanicals or structural items like furnace, roof, or wiring. If you don’t know those costs, don’t guess, you can always get an estimate from a reputable contractor or ask the current homeowner for copies of his or her utility bills.
In addition, some communities have trash removal or monthly homeowner fees, while others don’t. Some have significantly higher taxes than others do, too. Gather all the facts on every property you’re considering. List them in a spread sheet, one column for each home. This will give you anticipated monthly ownership expenses and make properties easy to compare.
5) In the end, it’s all about what you want and need in a home
So make a list of the ten things most important to you. Decide which are deal-breakers, and rank items from most important to least. Don’t forget about curb appeal, structural integrity, and resale value. Make your decision based on facts, not fears or emotions. You probably won’t get all ten, but if you get seven, including your deal-breakers, you’re doing great.