One of the biggest lessons from the 2008 financial crisis is that we should all take good care when buying a house. Owning a house is a dream for many people. That dream can very quickly turn into a nightmare if you do not take precaution. For new homeowners (even for those who have bought a house before) buying a home can be puzzling. Here is a quick guide for you to use.
Buy vs. Rent
The first decision that you should make is whether you should purchase a house or rent it. Buying will give you tax breaks, payments will be stable if you choose fixed rate mortgage, the homes almost always increase in value, and you can even rent out the home. Renting on the other hands is for those who want more mobility, and it also reduces the maintenance cost although you don’t have the same freedom.
Once you decide if you want to buy, you need to find out how much you can borrow from the bank. Make sure you have an idea of how much you can afford in monthly payment. Get a pre-approval letter which will indicate how much money you qualify for. It will also show that you are a serious buyer. Understand the different types of mortgages too and ensure you can afford the down payment.
Find a home
Now for the exciting part, finding your home. Have an idea of what you want in your home but be flexible. Do you want a condo or a home with a yard? These are some of the things you need to ask yourself putting your needs now and in the future in mind. There are many home search tools online to aid you. Examples include Trulia and Zillow.
Make an offer
Once you find the home you want, make the offer to buy the house at a certain price with some contingencies and be ready for some negotiations. Have a maximum price in mind and don’t compromise on that. Ask your realtor to compare the home you want with other similar houses before deciding on the amount to pay. Work with the agent and attorney on this step especially when making a contract.
Find a good inspector with the help of your realtor but be present during the inspection. This will give you a feel of your home to be, and you might get an idea of what you need to get for the new home. Amend the contract if the inspector finds any flaws requesting the issues raised to be addressed.
Be very proactive when looking for your banker to approve your financing. Provide any information the lender may ask for swiftly. Sometimes, you might be forced to reschedule your plans as the bank can delay.
Close the deal
You may do the closing yourself or with the help of an attorney. Closing involves signing the home closing documents together with the loan documents. Have your photo ID, a certified or cashier’s check, proof of insurance and the sales contract.
It is important to wait until you can afford to buy a home to avoid getting into a financial hole. There is more to the cost of owning a home than the monthly payments. When purchasing a house, follow these basic steps to keep yourself safe. This is an important investment. Make it right.