As of June 25, 2018, we’ve made some changes to the way our mortgage approvals work. You can read more about our Power Buyer ProcessTM.
So you’re sick of renting and you’re ready to get your first permanent place. Homeownership is a significant part of the American Dream, but no one tells you exactly what to look for in the buying process. Here are some guidelines to get you started.
While You’re Looking
There are a few things to consider when you’re on the house hunting trail.
Know What You Can Afford
A lot of people consider the cost of the monthly mortgage payment (principal, interest rate and taxes) when purchasing. You should also factor in the cost of utilities, maintenance/upgrades, your work commute and homeowners association fees. This will give you a better sense of your month-to-month expenses.
Consider Your Mortgage Options
If you’re planning on only being in your house a short time before expanding your family or looking at other options, an adjustable rate mortgage (ARM) could be your best bet. An ARM has a low fixed rate for a specified number of years at the beginning of the loan. After that fixed-rate term, the rate adjusts up or down once a year for the remainder of the mortgage term. If this is your steppingstone home, you can take advantage of the low fixed rate at the beginning of the loan.
If, on the other hand, you plan on being in your new home for the long term, a 15- or 30-year fixed-rate mortgage might be the way to go. This way, you can secure an interest rate that doesn’t adjust over the life of the loan.
Mortgage preapproval will not only help you figure out how much money you can spend, but it will also make closing go faster. Quicken Loans also has a mortgage calculator that walks you through a series of questions to determine how much you might spend for a given loan amount.
Open House Considerations
Before going to the open house, have a list of wants and needs that are important to you. Consider how much space you need, the distance to work and the schools. If you like entertainment, look at the distance to local venues.
Buyers often fear putting their contact information on sign-in sheets because they worry about being contacted by the realtor in charge for a sales pitch. It’s not necessary to put your name or phone number down. You should sign in, however, as this at least gives the homeowner an idea of who went through their home.
When You Buy
Now that you’ve picked out the perfect home, there are a few things to think about during the purchase process.
Check Your Credit
Checking your credit will help you avoid any surprises when it comes time to get the final mortgage approval.
Quizzle will allow you to get a free credit score and a free Equifax credit report every six months.
Make the Right Offer
When you’re finally ready to make an offer on a property, knowing a few things can help you in the negotiation process:
- The position of the asking price in relation to the prices of similar properties for sale in the area
- How many comparable properties are available
- How long the house has been on the market
Get an Inspection
It’s a good idea to have a licensed inspector go through the house before final purchase to make sure there aren’t any major undisclosed issues with the house. This could prevent you from buying a house and then discovering that it’s in need of major repairs. If the issue isn’t big enough to make you walk away from the sale, you might be able to use it to get the seller to lower the price.
Have a home buying tip I haven’t mentioned? Leave it in the comments below.
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