Next to bringing a baby into the world, a home purchase is biggest financial event of our lives. With housing prices continuing to rise in most areas of the country, the stakes are particularly large, especially if it is your first home purchase. Following these proven tips can make your first homebuying experience a positive one.
Be Ready to Dwell for a While
It used to be that you could buy a house, and within a few years you would have several options available to you if you wanted to change your view. While housing prices will continue to trend higher in the long term, you should consider your purchase to be a long term buy-and-hold. In a time of slower price growth, just getting past the transaction costs could take many years.
Get Your Credit in Order
Credit has grown tighter in recent years. Lenders are trying to make up for past mistakes. While it is still available, credit must meet much higher standards. You will need a credit score in excess of 700 to get terms that you can afford. You should start getting your credit report in order at least 12 months ahead of your target purchase date.
Go Big with Your Down Payment
While it is still possible to get 10% loans (or lower) the bigger your down payment the better. If you can’t afford a 20% loan, you should consider a mortgage plan that will allow you to accelerate your mortgage, so that, when you have the cash flow, you build your equity.
Buy Near Quality Education
Studies have shown that homes located near good quality schools appreciate in value more than others. In down markets they are also the houses that sell the quickest.
Find a Local Expert
Getting information and guidance on your home purchase is easier than ever with so many online resources, and you should avail yourself to as much of it as you can. But, there is no substitute for local expertise. Teaming up with the right realtor can give you the edge you need when it comes time to making final decisions. The best source for top real estate professionals are referrals from people you know.
Pick Points over Interest Rate
Going back to item #1, you shouldn’t be considering a home purchase unless you plan on staying put for a while. If that is the case, you are better off from financing standpoint with paying more in points than in interest charges. In the long run, you will save on costs.
Shop with Confidence
When it is time to go house hunting, have a pre-approval in your pocket changes the whole game. You can walk into models or open houses knowing what you can afford and realtors will take you more seriously when you being to talk price. It also can save you time, because you will know the upper range of prices that you can consider.
Bid with Confidence
If you have teamed with a competent realtor, the bidding process should go smoothly, however, it doesn’t hurt to do your own research. Find out what the recent selling prices are in the neighborhood, and bid based on the current trends. You’ll be in a better position to know where your bid should come in that will generate the right response.
