Top Money Tips for Buyers

Top Money Tips For Buyers

Listed are some of the top tips for anyone thinking of buying a home, all driven by the end-all effect of money.

You want to get a free copy of your credit report and check it for any errors or items that should have long ago been removed.

Once you have the report straightened out you want to make sure that anything negative is repaired if at all possible as this could make or break your ability to obtain a loan.

If you don’t plan on staying in the home for at least a minimum of 3 to 5 years then you should re-think buying at this time. Between all of the costs incurred with home buying, the money you need for a down payment, and the rise and fall of the Real Estate market you will probably end up losing money if you end up selling your home before that time. Why bother making a purchase that you’re almost assured of losing money on? For now stay where you are or rent another place until you know you’re going to be able to stay in your home for a while.

Having proof that a bank will most likely approve your loan puts you in a better position all around as a buyer. It tells you the amount you will most likely be approved for and gives you some leverage when negotiating, especially if you’re bidding against someone who hasn’t gone through pre-approval. Remember that pre-approval does not guarantee that you will get the loan on the house you want but it is generally a pretty good faith statement.

There are simply too many ins and outs to purchasing a home to handle it on your own. Using a knowledgeable Buyer’s Agent who has your best interests at heart is the best way to go. Many agents don’t even charge to utilize their expertise and only get their “profit” when they sell a home and split the proceeds with the listing agent.  Others may have a minimal percentage fee if they find you a home you buy.

Most every Buyer’s Agent will require a contract but that’s a formality that can’t be avoided and shouldn’t be an issue as it simply protects all of the time, money, and effort the agent is going to be putting into finding you the home of your dreams. Utilizing a Buyer’s Agent will help you from being overwhelmed by everything from the amount of paperwork soon to ensue and they should be in the forefront of negotiating you the best deal possible.

Take the time to shop around for a loan and pay close attention to both interest rates and points. You may have the option to pay for extra points at the closing (money up front) for a lower interest rate. This lower interest rate could save you thousands or more. If you’re in the position of having a good credit score don’t be afraid to make lenders bid for your business. Tell the lenders when you have a better offer and see if they won’t match or come up with a better offer. If you’re credit’s not perfect you can still try this technique but you generally have a little less pull.

While the general rule of thumb is 20% down there are exceptions to the rule and various programs and special loans out there that may make it so you don’t need that much money to start. If you’re a Veteran you can probably qualify for a VA Loan which allows some people to have little to no money down as their down payment; while other loans out there and specially funded programs can require as low as 3% down to qualify. A good, qualified agent will be well versed in what’s available for you in your area and should be able to either direct you to a loan agent to guide you or help you themselves.

As “common sense” as this may sound many times a realtor or loan agency will convince you that you can afford more than you think you can or you feel comfortable. On paper it may even look as though they are right but the truth is when you really add in things like your Saturday afternoon Chinese dinners and the kids’ school clothes & tuition, etc. you will find that you need a certain amount of income available to “live” a comfortable lifestyle.

We’ve all heard the term “house broke” and nobody wants to be there. Every time your friends call and ask if you want to join them to a movie or take the kids skating, if you’re forced to say no because you simply have zero funds left after paying your regular bills and mortgage you will soon resent buying the house. As a rule of thumb most lenders say you should buy a home about 2 ½ times your annual income. While this is a good number to keep in mind, what really matters is what you have to work with and what you spend along with your mortgage payment.

Be Realistic

Even if you don’t have kids or your kids are grown there may come a time when you’re ready to upgrade or downsize and sell the home you’re in. If you buy in an area where the school district is well sought after you
can almost always be assured your home will hold its value well and have a lot more buyers interested.

This is another area where working with an agent will help. An agent can print a CMA that will allow you to see what other comparable homes in the area have been selling for so you don’t over-bid. You want to know for sure what the true value of the home you’re interested in is worth so you don’t overbid. Once again, an agent should be there to avoid you ever doing this also and will be able to tell you what a reasonable bid is. Your agent should never allow you to overbid and pay more for a house than you should as this is one of the biggest jobs of the Buyer’s Agent.

A home inspection and a home appraisal are two very different things. Your lender will require a home appraisal to assure that the home is worth what they’re going to be giving you. A home inspection is a cost that you will have to incur and will probably cost a few hundred dollars but could save you thousands. Go with a well respected, well known, home inspecting company. Your agent may know of one or you may have friends who’ve used a particular inspector that they liked.

The job of the inspector is to serve as an inspecting engineer to assure the home is not only sturdy and the foundation is worth but that many of the other aspects of the home are acceptable from the wiring to the plumbing. They will be able to foresee if there are any obvious problems that could occur in the near future or give you an estimated time before perhaps a roof will need replaced.

You can use these problems, whether small or large, to negotiate or even get out of purchasing the home if they aren’t taken care of or agreed upon on how they will be cared for. Things that many people don’t understand or realize, such as asbestos removal or lead paint, could cost you a lot of extra money once you purchase the home. A good home inspector can tell if any of these things are a problem. A home inspection from a professional is a MUST before signing any paperwork that commits you to the house completely.