Buying a house is an exciting feat that many people dream of accomplishing at some point in their life. At the same time, it's probably the largest investment you'll make.
So, before diving into the world of homeownership here's a list of steps you should take:
1) Make Your Credit Score Nice and Strong
It's simple. The lower your credit score is, the higher your monthly payments will be and vice versa. If your credit score is in the low600s or less, you'll likely pay larger fees and a higher down payment. On the other side, having a 700 or above will result in the best rates on the market.
2) Get Pre-Approved
Pre-approval ensures that you'll be able to get a loan so long as your financial situation stays the same (this includes your credit score!) This also helps sellers feel more comfortable selling. It's better for them to see that you won't get turned down for a loan further down the line.
3) Understand the Expenses
Above your mortgage, there are plenty of other fees that go along with buying a home. Anything from property taxes, association fees, insurance, and repairs. Be sure that you have the income and budget to cover these things.
4) Know what you want.
With all the excitement of finally getting your own place, it's easy to forget the many options available. Do you want a house? Front porch and all? Or would you rather get a condo that doesn't require much maintenance? It's important to understand your options and what comes along with them. After all, this is a place that you'll live in for a long time. Make sure that it comfortable meets your lifestyle.
5) Work with realtors familiar with the area, not just the house
Working with a realtor whose familiar with the neighborhood can be very insightful. You won't only learn about the house itself, but the overall area. You'll hear of any areas to avoid as well as any additional neighborhood characteristics that you probably want to know before buying. A neighborhood can make or break a deal.
6) Buy what you're comfortable spending on
You may be approved for a loan far beyond what you expected. Try to be cautious and only use the amount of money you're comfortable paying. Using the total amount of your approved loan could result in you spreading yourself thin and becoming a slave to your new home.
7) Envision yourself in the home
If the home is still riddled with the previous owner's things, it can be a little difficult to envision your own life there. Still, try your best to visualize your life in this space. It's better to think of this now than buy a home and realize it doesn't fit your needs or lifestyle.
8) Get a Reputable Home Inspector
Be sure to find an inspector whose part of the American Society of Home Inspectors (ASHI) If for any reason this is not an option, try someone recommended by your real estate agent. Be sure this person knows what they're doing and will not purposely miss any important issues to persuade a purchase.
9) Ensure that Any and All Renovations are Up to Code
Check and see if any and all renovations are done were done with a permit. If they weren't, this could mean the work was not done right. It also means that they were not reviewed by an inspector and could be potentially harmful. It is advised that you ask your seller to get the permits taken care of prior to any purchase. This will save you a big headache should you want to sell yourself.
10) Look for Harmful Problems
If the home is in good shape, it shouldn't have any of these problems. However, if any of these are found, contact the seller and get it professionally conditioned.
Water - Check for any water or precipitation that falls around the property in areas where it shouldn't. Your roof and pipes should not be leaking.
Asbestos, Mold, and Radon - Asbestos is a mineral fiber that, if not properly conditioned, can result in lung cancer. If you smoke, the chances of getting lung cancer if inhaling asbestos fibers can increase greatly. Mold is another issue that can cause health problems. Even more so if you already suffer from respiratory problems. Any necessary mold remediation should be taken care of by the seller. Radon is an odorless gas that can be found in both the air and water. While getting rid of mold may be easy and inexpensive, removing radon from water can really put a dent in your pocket costing upwards of $4,000.
11) Make Sure the Electric System is up to Standard
If the home you're looking at was built before the 1930s, you'll likely have to schedule some work. Current safety codes require modern electric wiring. Many lenders and insurance companies may not work with a buyer if the home has any electrical safety hazards.
12) Don't Make Any Changes to your Financial Situation
Remember that pre-approval back in step one? That pre-approval is based on your then financial and credit score status. It is the reason you got accepted in the first place. Naturally, any changes that greatly affect your finances can result in a denial of the request. This is especially hard when you already go through the house hunting process and find a house you really love.
Buying a home is an exciting and fulfilling milestone in a person's life. But, as you can see, it also requires a lot of time and research. All, of course, worth it once the process is over and you're ready to move into your new home.
Keeping your home and family safe after the move-in, however, is a whole other story. At Amigo Insurance, we offer great rates on homeowner's insurance. Let help keep your new home, and family, safe.