Home Buying Tips

Getting started:

Hire a real estate professional.
The first step is to select a professional to help you find your dream home and fine-tune your financial expectations. Working with a buyer agent is worth consideration since he or she is legally responsible for representing the buyer's interest in a real estate transaction. Before making a decision, however, have a Realtor explain the pros and cons of using a buyer agent versus a sales or dual agent

Shop for mortgage rates and terms.
A difference of even half a percentage point can mean a huge savings over the life of a loan. For example, the difference in the monthly payment on a $100,000 mortgage at 8 percent vs. 7.5 percent is about $35 per month. Over 30 years, that's $12,600.

Pre-qualify for a loan.
Your third step should be to get pre-qualified, which determines how much you can afford. It allows you to move swiftly when you find the right home, especially when there are other interested buyers. It also indicates to the seller that you are serious and really can afford to buy the property.

Define what you want.
The next step is to create a realistic idea of the property you'd like to buy. What features are most important to you? Make two lists: one of the items you can't live without and one of the features you would enjoy. Refine the lists as you house hunt. It is also helpful to search online to see what is currently available on the market. Your real estate professional can then show you houses that meet your expectations.

Visit properties.
Now you're ready to visit houses. Ask your agent to show you properties and keep track of those you've seen.

Know the features that help or hurt resale.
In some areas, a swimming pool actually detracts from a home's value and makes it harder to sell. In neighborhoods with two-car, attached garages, a single-car or detached garage may impact the home sale and future value.

Rate the houses you tour.
After touring each home, write down what you liked and didn't like. Develop a rating system that will help narrow the field down. For example, pick the house you like best on day one and compare all other houses to it. When you find a better one, use the new favorite as the standard.

Make an offer.
Once you've pinpointed your dream house, it's time to get serious about the financial and contractual side of the purchase.

Arrange for a home inspection.
After your offer is accepted, set up a home inspection. It's common to find problems, including leaky roofs, cracked walls, insect infestations and foundation problems. Your real estate agent can help find a reputable inspector, and will negotiate to get you the most for your money once the inspector's report is complete. If you negotiate repairs as part of the purchase, ask for a "walk through" before finalizing the paperwork.

Close
Before your closing date, make sure you've made all necessary deposits and completed the paperwork - including mortgage, title, homeowners insurance and any other paperwork required by local or state governments.


The buying process

Where do I begin the process of looking for a home?
The first thing you should do is to begin focusing on what you're looking for in a home. You can start by establishing priorities in the following three areas:

Location: Are you relocating to a new town because of a new job or to be closer to your current job? How will the location of schools, shops, and transportation affect your choice of neighborhood?

Personal Tastes: How large of a home do you need? What style of architecture do you prefer? What type of lot do you prefer? Depending on where you move to, you may have a choice of homes in dozens of styles, sizes, and settings.

Budget: How much home can you comfortably afford?

As you consider these issues, do a little research of your own. Look through magazines for ideas about home styles and features. Drive through neighborhoods that appeal to you to see what's available. Read the real estate listings in the newspaper to learn about current prices in the areas you're considering. Talk to friends about the features that you'd really like to have in your home. The more knowledgeable you become, the better your final decision is likely to be.

Then sit down and consider carefully all the things you're looking for in a home. The Homebuyer's Wish List worksheet later in this section is a good starting point. When you've filled it out, you'll begin to get a good idea of what you'd like your dream home to be.


How do I know how much home I can afford?
We've found that affordability is probably the single biggest concern of today's first-time home buyers. Given the wide range of media coverage regularly devoted to the issue, it's not surprising that many young families wonder how long it will take them to afford their first home. Talk to your real estate agent. A good sales professional is committed to honestly and responsibly working with you to determine your affordable price range. There are many financing options available today, and some include low down payments. Your sales professional will help find an option that fits your budget, and you may be surprised at just how much home you can afford.


How does buying compare to renting?
Renting offers a lifestyle that's nearly maintenance-free. That may appeal to you, but consider that renting offers you no equity, no tax benefit, and most likely no protection against regular rent increases. Several financing options hold special advantages for first-time buyers or families with limited cash reserves. FHA-insured and VA-guaranteed mortgages can minimize or even eliminate your down payment. You may also consider a lease-purchase agreement, or borrow cash for a down payment from life insurance, profit-sharing or a retirement account.


What should I think about when I'm deciding which community I want to live in?
Good city services, nice parks and playground facilities, convenient shopping and transportation, a track record of sound development and good planning — these are just a few considerations that are important to many people when they choose a community in which to live. As for individual neighborhoods within a village or city, there is no better source of information than your real estate professional. Sales professionals know the people and the communities they serve, and chances are they can help you find a neighborhood that really fits your family's needs.


Where can I get information about local schools?
Again, a good real estate professional is perhaps your best source. They know where the local schools are and can provide you with valuable information about school districts, including test scores, extracurricular activities, bus service and more. If you're relocating, a sales professional may even be able to put you in touch with teachers and principals when you visit the area. And if you want to do a little searching on your own, the Internet may also be a good place to start.



How can I find out what my property tax bill will be?
Usually, the total amount of the previous year's property taxes is included on the listing information sheet for the home you're interested in. If not, ask to see the seller's receipt. Remember, tax rates change from year to year, so the previous year's bill should be considered simply as a "ballpark" figure of what you would pay.


If I'm moving a considerable distance, is there any way I can screen homes before I start traveling?
Yes. Today's Multiple Listing Services (MLS) — which include as much as 90 percent of the homes listed in any given community — have made it relatively easy for buyers to access detailed information on homes for sale practically anywhere in the country.


When I start visiting homes, what should I be looking for the first time through?
The house you ultimately choose to call home will play a major role in your family's life. A home can be an excellent investment, but more importantly, it should fit the way you live, with spaces and features that appeal to everyone in the family.

As you look at each home, consider these important factors:

Is there enough room for you now and in the near future?
Is the home's floor plan right for your family?
Is there enough storage space?
Will you have to replace the appliances?
Is the yard the size that you want?
Are there enough bathrooms?
Will your present furniture work in this home?



What should I ask about each home that I look at?
As a rule of thumb, ask any questions you have about specific rooms, features, or functions. Pay particular attention to areas that you feel could become "problem" ones — additions, defects, areas that have been repaired. And above all, if you don't feel your question has been answered, ask until you understand and are satisfied. In most cases, your real estate agent will be able to provide you with detailed information about each home you see.



How many homes should I look at before I buy?
There is no set number of homes you should look at before you decide to make an offer on one. That's why providing the sales professional with as many details as possible up front is so helpful. The perfect home may be waiting for you on your first visit. Even if it isn't, the house-hunting process will help you get a feeling for the homes in the community and narrow your choices to a few homes that are worth a second look.



How do I know I'm getting the best value for my money?
A professional appraisal is the best way to tell if a home is priced fairly. A real estate appraisal is an unbiased opinion of a property's value based on its style and appearance, construction quality, usefulness, and other factors, including the value of comparable properties nearby.
When you apply for a mortgage, the lender will have a professional real estate appraiser perform an appraisal of the property.


I'd like to have a professional look at the home before I buy it. What does a home inspector do?
For your own safety, and to make sure you're getting your money's worth in the home you choose, using a professional home inspector is highly recommended. A home inspector will check a variety of things such as your home's plumbing, heating, cooling, and electrical systems, and look for structural problems like a damp or leaky basement, etc. Usually, you call an inspector immediately after you've made an offer on a home. However, before you sign any written offer, make sure (or have your attorney make sure) that it includes an inspection clause, which says that your purchase obligation is contingent on the findings of a professional home inspector. Your inspector will not tell you whether he or she thinks the home is worth the money you are offering. Rather, the inspector's job is to make you aware of repairs that are recommended or necessary. A seller may be willing to renegotiate a price to accommodate needed repairs, or you may decide that the home will take too much work and money. A professional inspection will help you make an informed decision.


Should I be present during the inspection?
Yes. It's not required, but it is very much to your advantage. You'll be able to clearly understand the inspection report and know exactly which areas need attention. In addition, you can get answers to many questions, tips for maintenance, and a lot of general information that will help you when you move into your new home.



When I've found the home I like, how do I make an offer?
When you've found a special house you want to call home, you'll probably feel excited and a bit nervous. Let the sales professional know you're ready to write an "offer to purchase" which is a written document that declares how much you are willing to pay for the home provided that certain conditions are met. Because it's a legally binding contract that you will sign and date, it may be a good idea to have a lawyer review it, within the grace period noted in the contract. This is the time when it is most important for you to keep in mind that, unless you have specifically retained the services of a buyer's agent, the sales professional is working for the seller. As the legal agent of the seller, he or she is obligated to help the seller get the best price, and will report to the seller any confidence you share.
Your offer should have a time limit for the seller to accept it, reject it, or make a counter-offer. If a counter-offer is made, you will have some time to respond. Often, several offers go back and forth until an offer is accepted, or one party decides to end negotiations.


How do I determine the amount of my initial offer?
There is really no rule to use in calculating an initial offer. Naturally, the buyer wants the best value and the seller want the best price, but negotiations can be influenced by many factors, such as a seller who may be changing jobs and wants to sell quickly, or a buyer who is set on a specific home. After you've looked at the home's features, asked questions, checked comparables, and talked about it with your sales professional, you should have a good idea of what the home's value is in the current market. Consider what you can afford, and make an offer that you consider to be fair.


Is there any way I can protect myself against emergency repair bills in my new home?
Yes. Home warranties offer you protection against many potentially costly problems not covered by your homeowner's insurance. Such warranties have become increasingly popular in recent years, and for good reason. The coverage can save you thousands in the event of a major mechanical breakdown at a time when your cash reserves have been depleted by your down payment and moving expenses.


There's so much to remember before I close. What do I have to do?

Make a checklist and follow it carefully:
Are all the necessary inspections complete? Are all the required repairs complete?
When will you conduct your final walk-through inspection?
Is your attorney satisfied that title to the property is clear (no one else has a claim on it)?
Have you confirmed a date, time, and place for your closing?
Who will conduct the closing?
Is your insurance policy paid and ready to go into effect the day you close?
What form of check should you use to pay for the closing costs?
Has your closing sales professional told you the closing amount?
Do you have receipts for the items you have already paid for, including your deposit and inspection fees?
Bring your checkbook to cover any last-minute extras that might have been overlooked.


What will happen on closing day?

The lender's agent will ask for your paid home insurance policy.
The agent will list the adjustments. These include the money you owe the seller (the remainder of the down payment; prepaid taxes) and what the seller owes you (unpaid taxes; prepaid rent).
You will sign the mortgage. This gives the lender legal rights to the property if you don't make your payments.
You will sign the mortgage note (the promise to repay the loan in regular monthly payments).
You will get title from the seller in the form of a signed deed.
The lender's agent will collect the closing costs from you and give you a settlement statement of all the items you have paid for.
The deed and mortgage will be recorded in the town or county Registry of Deeds.