Buyer’s Tip

Purchasing a home is likely the largest purchase you will ever make.  Here are some tips to make the process smoother.

Credit is Important

Management of your finances is best reflected in your credit reports.  Pull your credit reports to see if there are any surprises.  There could be an unpaid bill on a report when it was actually paid.  This type of error is easily corrected but leaving it on your report could mean a higher interest rate from a lender.  Your credit report is critical as lenders rely on them in the mortgage approval process and in determining your interest rate and other loan terms.

You Better Shop Around

Get pre-approved before you even look at a home.  You should shop for a mortgage by contacting at least three lenders.  Most companies will pre-approve you based on your credit report and credit score.  A pre-approval will be critical as most sellers will not accept an offer without one.

Inspections are a Must

Always insist on a home inspection prior to closing, even if you know the seller won’t agree to make repairs. Inspection contingencies should always give you the option of backing out of a contract if you find that the house needs more repairs than you are willing to deal with. A whole house inspection is important, but so are checks for radon gas levels, pests, fireplaces, septic systems, private wells, molds and other potential problems.

Use Your Crystal Ball

Is this the home where you spend the rest of your life?  Probably not, so think about the future appeal to a prospective buyer when you are ready to sell.  Buying a home with good resale value requires you to do research but will pay off in future dividends with a quick sale and extra money in your bank account.  A low price isn’t a good deal if you can’t sell it when you want to.

Gotta Be in Writing

Handshakes are for greetings.  Sealing the deal requires more than a verbal agreement for anything in the home buying process.  Remember you cannot enforce a verbal agreement.  Memories can grow dim and interpretations of what was agreed to can be different.  Put everything in wiring and make sure that everyone with an interest in the sale signs on the bottom line.

Final Walk Through

Do a final walk-through after the house is vacant, on the day of closing if possible, and don’t let anyone talk you out of it. You want to find damage before money changes hands, because it’ll sure be more difficult to recover funds to make repairs after the papers are signed.

Don’t Over Extend

Avoid the temptation to over-extend yourself by buying more house than you can afford. No-money-down or low-down payment loans for real estate purchases are very popular. So are home equity loans for repairs and upgrades. But, if your equity is low, and the local real estate bubble bursts, you might end up owing more for the house than it’s worth. That’s not a problem if you can stay put until prices come back up, but an unexpected move could force you to find extra money to pay off the loan when you sell.