Make the Jump Into Home Ownership!

By Bruce Ueno

Home values are on the rise and the cost of credit remains near historic lows- this makes the idea of buying a home in today's market an extremely wise one.  While at first the idea may seem intimidating, in the long run, home ownership is a great investment.  If you plan to stay in an area for a while, there's no sense in paying thousands of dollars every month for housing that you'll never own, and never see a financial return on. 

 

If you're ready to take action on finding a home of your own, here are some tips to get your started:

Prequalify with a Lender

One of the first steps to take is to visit a bank or mortgage broker to see what amount of money you might qualify for as a borrower. If you don't already have a lender, your realtor can assist you in selecting one.

Bear in mind, nothing will be hidden from your lender.  For instance, your full credit history and any credit card or school debt will be on display. Your lender will also verify your salary and any other assets you may have.  As tedious and intrusive as this process may sound, it actually works in your favor, as prequalification is one of the best negotiating tools you will have when it comes to closing the deal with a seller.

Once you have been prequalified, don't do anything that may change your credit score. Your lender will verify your credit worthiness again prior to closing, and anything that adversely affects your credit can kill your deal.

Once you know the amount of loan or mortgage you qualify for, you can narrow down the types of homes available at that price.

Important to Note:  Be sensible and avoid jumping into home ownership at a cost that's over your head.  Banks often over-estimate the amount of debt a person can handle.  Unsuspecting purchasers often encounter trouble down the road when they haven't fully calculated all the costs.

Estimate All Costs

There will be costs beyond the price of the house itself.  There will be closing costs to cover, including loan origination, title charges, escrow, appraisal, home inspection and prepaid insurance. There may be sales tax to pay, depending on where you live, or if you're buying a new home from a builder. 

On the big-picture front, there will be house insurance, property tax, and utility bills to pay on a regular basis.  Don't forget to allow for repairs or upgrades that may be required on the home.  Build in room for the charges utility companies will add for opening your account.  Factor in the cost of moving and any new furnishings you plan to buy.

Important to Note:  Don't let the additional costs scare you away from home ownership.  Every homeowner deals with them.  Research them and devise a plan to cover them.

Become Acquainted with the Market

Become acquainted with the real estate market in the area you would like to live.  Look at house sizes and prices online, or in a newspaper or magazine that features homes for sale in your area of choice. 

Start a conversation with a realtor to find out what you can get for the money you have earmarked.  Subscribe to your realtor's update service for information on new listings as they become available.

Important to Note:  Comparing homes from a write-up alone can be tricky.  You'll need to actually visit homes with your realtor to see what you will actually get for your dollar.

Set Your Priorities

Begin your priority list by narrowing down one or two neighborhoods of interest, followed by the number of bedrooms, bathrooms, or square feet you'd like. 

Then answer a few key questions such as these:  Do you absolutely need a finished basement?  Do you need a three-car garage, or will a two-car garage suffice?  Is doing the laundry in the garage workable, or is an interior laundry room a top priority?  Do you prefer an open concept floor plan, or separated rooms?  When the time comes to decide between homes, you might end up choosing a home based on how many items on your list it meets.

Important to Note:  Two homes may be similar in size and style, but they may vary in price from one neighbourhood to another.  Find out why.  Then decide if cost savings or location is more important.

Visit Homes

In order to actually visit homes, you'll need to hire a realtor.  He or she will ask you for details, compare your wish list to the market, and book appointments for you. 

Your realtor may show you houses both below and above your price range.  This will give you a good idea of what is available at various prices. 

Important to Note:  You may not find what you're searching for at first. There may be few homes on the market that fit the description you've given, or you might discover you can't get what you want at the price you have in mind.  Be prepared to compromise, and determine whether you can afford to change your price limit.

Ask Questions

A knowledgeable realtor should be able to answer questions on the homes you're being shown.   No question is too impractical to ask.  Purchasing a home is one of the biggest decisions most people will make in their lives, A good realtor understands this and will be ready to assist.

If your realtor is unable to provide answers to your questions, ask him to look into them and get back to you.  That's part of your realtor's job.  The answers you receive may influence your buying decision.

Important to Note:  Once you sign a contract with a particular realtor, you must stay with that realtor for the term you've signed on for.  You may also have a home inspection completed before sealing a deal.

Think Through Timing

It's preferable to look for a home well before you actually need one.  It may take time for the house that meets all your criteria to appear on the market. 

Once your realtor knows what you are looking for, he or she can keep an eye out for it.  When you do find the home of your dreams, there will be a delay between signing the deal and closing it, so you'll have to factor in time for that too.

Important to Note:  If you're not in a hurry to buy a house, watch the trends in your area.  For many, spring and early summer are peak times for houses to be put on the market.  You'll possibly have more inventory to choose from at those peak times.

Buying a home is a wise investment that will grow over time.  The sooner you get into the market, the better.  Don't delay.  Start taking steps today and, in no time, you'll soon be able to make the transition from home renter to home owner.

Thinking about buying your first home?  I can help take the mystery out of the process.  Contact me today for a free, no-obligation consultation at (951) 310-0397.