Friday, May 9, 2014

Home Buying Tips

Considering buying a new home?  Dave Ramsey suggests a few helpful tips for those getting started.  Check out the section on Dave's website "Home Buying Tips" for more information.

Step 1:  Evaluate Your Finances
Before considering buying a house, you may want to get your finances in order.  Buying a home is a blessing but can be quite a financial commitment, so consider having a fully-funded emergency fund before anything else.  Also, ask some important questions such as 1) Can I make a 10-20% down payment? 2) Can I afford a 15-year fixed rate loan? 3) Can I keep the house payments below 25% of my monthly income?

Next, in order to increase your chance of getting the best deal when buying your home, try getting a pre-approved mortgage.  Taking time to compare offers from trusted mortgage providers can make sure you stay within your price range and allow you to make an instant offer when you find the perfect home.

Also, remember to consider the extra costs involved with owning a home.  Home owners have added expenses of property taxes, utilities, insurance, and more.

Step 2:  Call The Pros
Start by making a list of features you would like in your new home.  A new house is a significant financial AND time investment, and you and your family will want to be happy for many years to come in the new place.  Having a good idea of where you would like to live (city, suburbs, country), how many stories/levels you want, if you want a garage, walk-in closets, and backyard size are just a few considerations to pass along to your buying agent.

Next, find the right buying agent to help you buy your house, to help you save time and money.  A good buying agent could  be someone who only takes commission from the seller of your house and does not charge you, someone who makes sure you never pay more than you should by representing you well in price negotiations, and someone who makes sure all the appropriate paperwork is completed.

Also, take time to find the right home inspector in advance, so when you find the perfect home you will already have someone to inspect it for you.  A good home inspector could be reliable, come highly recommended by people you know, have solid references, and a good background.  The home inspector you pick could have a broad knowledge of home systems and structures and a long history in the inspection business, and should also be independent and have no connection to the seller.  Finally, you may want to make sure your home inspector will give you a complete report.

Step 3:  House Hunting
Location of your new home may be very important, not only now but in the future.  Unless otherwise planned, you may eventually want to resell your house, and you might want it to be in a good location.  Some considerations to make regarding location include 1) How close is the home to your office? 2) Is the home in a good school district? 3) Is the home conveniently located near shopping centers, churces, etc? and 4) Is the home in a low crime area?
 
Also, remember that not every seller may own up to the physical details that need to be fixed.  Consider getting the home inspected early in the process, and possibly hiring an independent inspector to objectively view the home inside and out.  Then consider including anything the inspector finds that needs to be fixed (plus the estimated costs) in the final contract.

Step 4:  Close The Deal
Before making the final moves to buying your home, consider getting a property survey, which could reveal boundaries, easements, encroachments, and other legal concerns which could alter the value of your home and property in the future.   Common issues (such as your neighborhood lots having Public Utility Easement) could allow a utility company to, for example, place a large electricity pole in your front yard, thus changing your home's value.
 
Now is the time to consider utilizing the home inspector you may have already picked.  The inspector may examine the home's condition and look for problems you may not have noticed, with key areas including the roof and gutter, house foundation, basement, and crawl space, heating and air condition systems, electrical systems, plumbing, kitchen counters, cabinets, faucets, etc., and bathrooms.
 
Once the home has been inspected and you are ready to make an offer, this may be the time your buying agent could come in most handy.  The buying agent should have access to a wide variety of information to keep you on track for offering the right amount to buy your home.  When negotiating offers, it may be best to keep the communication going through your buying agent, because they could be your best advocate and your best advisor at this point.
 
Finally, before you sign the mortgage and make the long-term commitment of buying (and continually paying for) your house, you may want to re-evaluate your mortgage to your financial capabilities.  The recommendation is a 15-year fixed rate, with your down payment at 10-20% of the home's value, and your house payment less than 25% of your monthly, take-home pay.
 
This article was written based off information provided by the section "Home Buying Tips" on Dave Ramsey's website (click here).

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