how to buy a house

Buying a home is still a milestone that most of us wish to check off our list. Regardless of how practical or impractical it may seem in today’s economy, it still remains a goal close to our hearts. This is an especially exciting time for first-time homebuyers. However, the home buying adventure can easily turn into a life-long nightmare if a strategy is not put into place. Here is a guide for first time buyers (and re-buyers) to create a positive and (relatively) painless process.

“Are you ready?” is a question that you should be able to answer with confidence. Many factors should be taken into consideration before you come the conclusion of this question. What is the purpose of buying a house? Is the desire to buy based on needs or wants? Are you trying to raise a big family or simply need more space? What location are you looking for? Is renting a better option? Are you in it for the long term or do you plan on moving within five years? Are you (or your family) financially stable to make this investment? Are you going to get reasonable interests and loans? If you can answer all of these questions then let’s move to step two.

***You may also want to attend seminars and workshops on this topic to help answer the above questions; these seminars cover everything from loans, interests, first time buyer programs, and tips on being a responsible homeowner.

Before you get too excited and Googling your dream house, you must know what your financial limits are. Start by getting pre-approved for mortgages. Explore various mortgage options and apply to at least 3-5 lenders before you settle for the best deal. A good credit history and a good bank balance are the key to getting the best deals. This process can be time consuming and its best if you begin before you start spending your Sundays at “Open Houses.” You should also save a good amount of money to use as down payment; at least 20% of the home’s cost for the down payment will significantly reduce monthly mortgage payments. This is also a good time to figure out how much you can afford to pay for taxes, mortgages, and home insurance; make sure that that these expenses are no more than 30% of your monthly income – the last thing you want is to dish out a lot of money on survival and save little to none for emergencies, retirement, and even entertainment. Now that you know what you can afford, let’s go find the house you’ve been looking for.

While websites are a great way to browse, it is highly advised that first time owners hire a realtor to help them to get the best inquiries; it is their job after all, so let them do what they do best. A realtor will listen to your demands and find you the best house that is available in your market. They will be able to tell you everything about the house—its history, any drastic changes, the differences between your potential house and the others in the neighborhood, etc. A good realtor will also be able to talk you out of certain unnecessary/unrealistic demands you may regret later. Looking for a good realtor, however, may not be so easy; start by asking to your friends and family for referrals. When your realtor finds you the house you love, let the negotiations begin! Understand that the negotiation process is tedious and vigorous; you may not be the only person bidding on the house so have a dependable and experienced person (like a parent) to consult with.

Now you are at the stage where verbal agreements can become binding and the financial structure of the contract will be created. Just take a breath because there’s one more step you need to make before you sign; get it inspected by a professional. Often times, people lose their judgment in heat of the excitement and skip this part. Yes, you will have to pay for a private inspector but the money they can save you on repairs like cracks, infestations, and potential huge issues will be drastic. Finding a qualified inspector is also important; look for one associated with American Society of Home Inspectors or the National Association of Home Inspectors.

Now that you’ve come this far, it’s time to sign the contract. But not too fast, like any contract, you must read terms and conditions over multiple times to avoid any future problems. It may also be in your favor to hire a lawyer to explain the contract to you in Layman’s terms. After all is said and done, CONGRATULATIONS! You are now a homeowner.

Final Tips:

• It is highly suggested that you do intense research on the market and the homes and take advice from experienced buyers.
• The entire process itself is time consuming and quite expensive; you must have at least $3,000-$5,000 in cash to pay for closing costs and at least 20% of the total home cost for down payment. Rule of thumb; if you are struggling to pay for such expenses, then you are not ready to buy a house.
• Do as much as you can to confirm that you are financially ready to take such a big leap. Remember, no more than 30% of your monthly income should go into property taxes and home insurance; don’t forget about the ten other monthly bills you pay for services like phone, gas, electric, etc. – these things add up out of nowhere!