Best-Kept Secrets for Buying a Home
Get the Biggest Bang for Your Buck with These Practical Home Buying Tips
Buying Secret #1: Keep Your Money Where It Is
Lenders need to see that you are reliable so that you can get the best loan possible. Making huge purchases or moving your money around three to six months before you purchase a new home can affect your credit profile. You are going to have a hard time getting a loan if you open new credit cards, amass too much debt or buy a lot of big ticket items.
Buying Secret #2: Get Pre-Approved for Your Home Loan
Being Pre-Qualified for a Loan and Being Pre-Approved are very different things. Anybody can get pre-qualified for a loan but in order to be Pre-Approved a lender has to actually look at your financial information and assess how much you can afford before deciding how much they will lend you. Shopping around for the best mortgage interest rates is easier to do before you buy a home and will prevent you from wasting your time and energy looking at homes you can’t afford.
Buying Secret # 3: Don’t Try to Time the Market
Real Estate is cyclical, it goes up and down and back up again. Don’t waste your energy trying to anticipate the best time to buy because timing the market is impossible! The best time to buy is when you find the right house for you that is within your budget. If you try to wait for the right time you are probably going to lose out.
Buying Secret # 4: Bigger Isn’t Always Better
Everyone thinks they want the biggest, most beautiful house on the block but in reality, bigger isn’t always better when it comes to buying houses. The largest house only appeals to a very small market and you don’t want to limit your options when it comes time to re-sell. There’s an old adage in real estate that says don’t buy the biggest, best house on the block. Your home is only going to increase in value as much as the houses around it. So if you have a $500,000 home in a $300,000 neighbourhood your appreciation is going to be pretty limited. Sometimes it’s best to buy the worst house because the worst house will always increase in value more per square foot than the best house.
Buying Secret #5: Avoid Hidden Costs
Don’t just focus on the mortgage payments. As a new home owner, you also need to consider property taxes, utilities, home owner association fees and you also need to be prepared to pay for repairs, maintenance and potential property tax increases. Make sure you leave yourself some wiggle room in your budget so you don’t risk losing your new home.
Buying Secret #6: You’re Buying a House – Not Dating It
Buying a house is an investment so it’s important to use your head. Buying a house based on emotions is only going to break your heart. Falling in love with something could cause you to make some bad financial decisions. Trust your instincts and make sure you are recognizing that you are getting a great house for good value instead of just obsessing over paint colors.
Buying Secret #7: Stalk the Neighbourhood
Drop by morning noon and night to get the lay of the land before you buy otherwise you could find out you’ve bought the perfect home in a neighbourhood that just isn’t for you. Drive by the house at all hours of the day to see what’s happening in the neighbourhood. Test out your daily commute from the property to make sure it’s something you can handle. Where is the nearest grocery store? Gas Station? School? Even if you don’t have children, research the schools in the area because this could affect resale value of your home. School district can affect the resale value of your home by as much as 20%
Buying Secret #8: The Secret Science of Bidding
Make your opening bid reasonable and not something that is going to totally offend the sellers. Base it on what you can afford and what you believe the property is actually worth. Many people think that they should start as low as possible but it depends what the market is doing at the time. Find out what the property has been assessed at for property taxes. Size up the home to what others in the area have gone for to figure out the average price per square foot (Your Realtor can help you with this!). Oddly enough, sellers respect a bid that is an oddball number and are more likely to take it more seriously. When you get more specific the sellers will think you've given the offer careful thought.
Buying Secret #9: Give Your House a Physical
If you buy a car without checking under the hood, you are at risk for buying something without an engine! You need to hire a home inspector. It will cost a couple hundred dollars but could save you thousands! A home inspector’s sole responsibility is to provide you with information you need to make a decision as to whether or not to buy. It’s the only way to get an unbiased third-party opinion. If the inspector does find any issues with the home, you can use it as a bargaining tool for lowering the price of the home. It’s better to spend the money up front on an inspector than to find out later you have to spend a fortune in repairs.