Buying a home can be an exciting process. It will be your place to decorate as you please, and you’ll be able to share it with your family and friends.
It’s a significant purchase – one that shouldn’t be made without a lot of knowledge and research.
Here are seven tips on what you should know before delving into the complicated world of home buying:
Know your ability to buy a house
Finding out about how much home you can afford is vital. Also, you’ll want to start the preapproval process to find out about how much a lender is willing to loan to you.
“A lot of buyers get their hopes up and waste a lot of their time finding the perfect house only to find out that their offers doesn’t carry much weight because they don’t have a preapproval,” said Rich Rodenburg, founder and owner of Nebraska Home Sales in Lincoln.
You can begin the preapproval process here.
Know when your perfect house comes on the market
This process is called auto prospecting, and it’s a software program that interfaces with the local Multiple Listing Service.
You answer some questions with your realtor about what exactly you are looking for in a home – price range, size, area of town, style or age of house, number of bedrooms, etc. Your realtor will then set you up with some good matches.
“We interview our clients and punch it into the system. Immediately, we send all the homes available that match their criteria. But the nice thing is when a new home comes on the market, they will immediately be notified,” Rodenburg said.
Clients have their own portal where they can reject or save the homes they don’t or do like. You also get the benefit of seeing attachments such as seller’s disclosure, which can specify any important updates or need-to-knows.
Understand your loan options
There are tons of loan options available, including FHA, USDA, conventional, piggyback and more.
“There are so many types of loans that require different levels of investment in the down payment, and closing costs,” he said.
You also might be eligible for downpayment or closing cost assistance, depending on if you are first-time home buyer, what area of the country you are buying in and your income. This can help you save big on your home.
Also, the type of loan you pick is also looked at in the case of many sales. For instance, an FHA or VA loan require a lower downpayment but also require a secondary inspection during the appraisal phase.
If they find something that is a health or safety issue, the loan can’t go through until it is fixed – even if it wasn’t negotiated with the inspection phase.
Always get an inspection
“We always recommend a whole house inspection after they go under contract. We have 12 days after the inspection to accept the house as is, walk away from the deal or what usually happens is negotiate for some of the repairs,” Rodenburg says.
Understand what your deal breaker might be
Rodenburg has heard horror stories where sellers and buyers draw lines in the sand and can negotiate for days about a $50 microwave. Neither one will budge, and the whole contract falls apart.
“Our job as realtors is to make sure we keep the emotions out of the transaction,” he explains.
He understands that a new refrigerator, washer and dryer could take away from their bottom line. Personal property is always a factor in negotiations.
Seek a warranty
You can ask the seller to buy or contribute to a home warranty which can usually cost $500-$800. “You need to have a contingency fund for when the hot water craps out. But some people are willing to split the cost of a home warranty. If I was buying a house that had a 30-year old air conditioner, I would insist on that,” he says.
You can also buy the warranty again by yourself after the first year. The price will go up, but it’s worth it, he adds.
Be flexible and open
If the seller needs a quick closing, offer to move faster if you can. If they need a longer closing because the house they are building won’t be done for a couple months, go with it.
“The market is crazy these days. In Lincoln last week, I put a house on the market one day and within 12 hours, there were four offers all over the asking price,” he says.
Many areas of the country are seeing low inventory along with the interest rates going up. He suggests finding a realtor to help you be ready to jump into action once you find the home you want.
“Buyers have realtors these days because of the climate in the housing industry,” he adds.