Top 10 Tips to
Successful Home
Buying
Tip #1:
Research Is The Key To Discovery
Home sellers won't call you with an
offer to buy a maintenance-free home with a wonderful mortgage. You have to
find the gems yourself! Only by reading available
materials, talking to friends and experts, and spending time looking at different homes, schools, and
neighborhoods will you end up with your American dream. Avoid the
nightmares by learning how best to buy and maintain a home.
Tip #2: Make A Plan And Get Pre-Qualified
Every important
decision needs to be clearly thought out. Developing a home buying
plan can help you focus on the important factors and organize the entire
process. You may even want to use a binder with sections on house hunting, home
financing, service providers, etc. Loan pre-qualifying helps you determine the
home price you can afford and presents you as a genuine prospect to the seller.
A lender typically uses the 28% formula
(your monthly mortgage can't exceed 28% of your monthly income)
in approving your loan. Planning your
actions and getting pre-qualified will keep you out of the panic mode and allow
you to take advantage of opportunities. A thorough
plan will save both time and money!
Tip #3:
Value, Value, Value
The days of
10-30% annual appreciation have passed. Home buyers in the 1970's
benefited tremendously from what seemed like ever appreciating home prices.
Nowadays, you're looking at slow growth while guarding against the
possibilities of falling prices, skyrocketing ARM rates and corporate layoffs
that can dramatically affect your home values. The classic rule of buying the
worst house in the best neighborhood still applies. If you buy with an eye
towards improvement, you can customize the home to fit your needs. The saying,
"make money buying a home, not selling one," should keep you focused on the
long-term importance of the purchasing price.
Tip #4:
Create A Top 10 List of Amenities
When shopping
for a home, list the features (fireplace, fenced-in yard, new
appliances, etc.) that are most important to you in
deciding on which home to buy. Establishing "your criteria" early on
will save time shopping for inappropriate homes and may keep you from buying a
home on a whim -- for example, because of a circular stairwell -- that doesn't
meet your fundamental requirements. As detailed in Tip #3, your top reason for
buying a home should be the value you are getting. Some of your top 10
amenities should logically be sacrificed if an incredible value is
available.
Tip #5:
Fixed vs. Adjustable Rate Mortgages
Which type of
loan fits your particular needs? If this will be your first home or
a "transitional home" -- one you plan to own for a short time, an ARM may be
the best type of loan. If it's going to be your dream home or one you plan to
raise a family in, then you may want the stability of a fixed rate mortgage. If
you choose an ARM, the index should be based on the Cost of Funds Index if
rates are increasing, and Treasury Bills if they are decreasing. The COFI's are
less volatile over time than T-Bills; make sure the teaser rate is understood
and what the real rate would be.
Whichever loan
you choose, make sure that you scrutinize all the closing costs. If
you are required to have a mortgage escrow account and private mortgage
insurance, make sure you understand the terms and cancellation procedures.
Also, make sure there are no prepayment penalties so that you can utilize an
accelerated mortgage plan. A good mortgage reduction plan can save you tens of
thousands in interest costs, and shorten your loan term, with only small extra
principal payments. If you experience negative changes in your job, health, or
marital status, you can revert to the standard payments in your mortgage
contract.
Tip #6:
Sign A Contract That Protects You
Make sure that
the contract you put on a house allows you to arrange financing, inspect the
home and negotiate any problems that you uncover. Ensuring that the
contract you sign will minimize potential legal battles will let you swim in
your new pool with your family and neighbors instead of with the
sharks.
Tip #7:
Put Yourself In The Seller's Shoes
You are about to make one of the most
important decisions that will affect both your life and the life of the seller.
If you take time to understand the reasons the seller
bought the home, their reasons for selling, and the home improvements they have
or have not made, you'll be in a better position to evaluate the home and
negotiate a better deal. In the end, the home buying process
excludes the professionals and comes down to the individuals buying and selling
the home. A closer look at the seller may help you in deciding whether and for
how much to buy a particular home.
Tip #8:
Develop A Mortgage Shopping Chart
One of the biggest decisions to make
before putting a contract on a home is how to finance the purchase. There are
10,000 lenders competing for your mortgage business. The days of simply walking
into the community bank and negotiating with the loan department manager are
over. Today, you can apply for a loan over the Internet or even use a mortgage
broker to shop for your loan with hundreds of lenders. When choosing a lender, you want to avoid apples to oranges
contrasts by comparing fixed rates to fixed rates, not fixed to
ARM's. Create a chart that lists different types of loans, fees, and
at least five mortgage providers (including a mortgage broker).
Tip #9:
Get A Quality Home Inspection
Although it is hard to believe, more
people pay for inspections before buying used cars than when making the biggest
investment of their lives -- their homes. Paying for
a qualified home inspection before you buy a home isn't just spending "a little
extra" for peace of mind; it's absolutely essential for anyone who doesn't want
to spend thousands of dollars for repairs.
Tip#10: Peace of Mind: Home Protection Plans
To protect both yourself as a buyer, and
well as the seller, it is a good idea to purchase a home protection plan.
What exactly is it? A home
warranty, or home protection plan, is a service contract, normally
for one year, which protects homeowners against the cost of unexpected repairs
or replacement on their major systems and appliances that break down due to
normal wear and tear. A negotiable contract between the buyers
and sellers which do not overlap or replace homeowner's insurance policy, this
type of warranty can save the new homeowner lots of headaches, as well as put
seller's fears to rest. The warranty covers mechanical breakdowns, while
insurance typically repairs the related damage, for example: if a hot water
heater burst and destroyed a wall in your home, the warranty would repair the
water heater and your insurance would pay to fix the wall.
Information provided by
The American Homeowners Association, Copyright© 1998
Don &
Jennifer Smith, Realtors®
Cumberland Realtors, Inc.
215 Main Street
Nashville, Homes for sale.
37206
Office: (615) 824-3344 Cell: (615) 300-3020 Toll Free: (800)
222-0441
Web: www.donsmith.com
Email: don@donsmith.com
Just close this frame
when you are through |
