When planning to purchase a house, potential homebuyers’ heads may be swimming with all of the home options they are presented with, but that is not the only thing they should consider through the home-buying process. There are many financial and research-intensive elements homebuyers should ask their Realtor about. The following tips are a great list of considerations for potential homebuyers to start considering.
#1 Saving for a Down Payment When saving for a down payment, first-time homebuyers should consider consulting early on with a lender and their real estate agent on what options are open to them in the financing process. Many first-time homebuyers think that they need a 20 percent down payment when they may actually qualify for a loan with as little as three of five percent down. Buyers’ closing costs could also be negotiated in this sale.
#2 Choosing a Lender Homebuyers should ask their lender about the communication style and availability of the lender during this transaction. This step is important because timely and successful communication could be the difference in pre-qualifying for a home quickly enough to make an offer. Presenting a pre-qualification letter is beneficial to both the potential buyer and seller during this process to qualify the offer. It also allows for the buyer to understand their budget and ability to pay.
#3 Pre-qualify for a Loan Homebuyers should have their lender issue them a pre-qualification for a mortgage loan early in the home buying process. There are a lot of documents to provide, so getting a comprehensive list and staying organized is important for this step. A mortgage lender will need job and income verifications, credit history and documentation of assets.
#4 The Home Buying Process Buyers should remember to exercise patience during the home-buying process. When there is a lull of properties to look at, homebuyers should remember that this decision is a long-term and significant financial decision. A dedicated Realtor should be working to be creative and proactive during this time to seek properties that may not even be on the market. Buyers should help their realtor identify ideal neighborhoods and home requirements to aid with this.
#5 Closing Costs Homebuyers may want to consider negotiating closing costs in the purchase contract. With effective negotiation, buyers may be able to reduce their closing costs down from the usual three to seven percent they pay in closing costs in addition to the down payment. Potential homebuyers should work both their Realtor and lender to know their options.
#6 What is an escalation clause? In a low inventory market, buyers should consider offering an escalation clause in their offer to make their bid more attractive. An escalation clause will typically state that the buyer is willing to pay a certain amount over their offering price in the event there are other offers. For this clause, buyers will want to specify a maximum price for this and seek Realtor and legal advice.
#7 Should I buy or rent? Homebuyers should consider the benefits of buying over renting. Homeowners can start building equity and avoid rising rental rates through a fixed mortgage payment - and create their ideal lifestyle through home improvements.
#8 Moving with Pets When moving far away with pets, homebuyers should contact their local vet for important records, forms and medicines. During travel, pet owners should keep the pet’s food bowl, bed, crates and toys nearby instead of packing them up. They should also consider updating the pet’s microchip and dog tags to reflect the new address.
#9 Living in a Historic District Potential homebuyers should ask their Realtor about buying in a historic or specially designated district usually listed by a municipality, county or state. These districts can have distinct requirements and restrictions for home renovations. Approvals are often required by a city officer, state officer or review board. These districts seem similar to a homeowner’s association but are usually enforced by government ordinances. It is important for the homebuyer to find out if the property is classified in this category before purchasing to evaluate potential additional reviews, requirements, and costs.
#10 Learn about your HOA Homebuyers should look into the difference of voluntary and mandatory Homeowner’s Associations and which structure their desired neighborhood offers. A voluntary association does not require a financial commitment to sustain it, but contributions may be encouraged to maintain common areas . This could include contributions to entrances, landscapes, social activities and more. A mandatory homeowner’s association is an entity with the recorded right to collect monies from property owners for stated uses which often include improvement to neighborhood club houses, common areas, pools, and walking paths. A Realtor can help provide insight to this difference and provide the correct documentation.
#11 Get a Home Inspection Homeowners should be sure to get a home inspection before closing on a home. These inspections can range from a general home inspection to specialized inspections such as: structural engineering, HVAC, electric, pools, septic systems, infestation and environmental inspections. Though inspections can vary widely in pricing, they can be money well spent when making a large purchase.
#12 Selecting your REALTOR Homebuyers should hire a Realtor who is trained to negotiate. One of the most important components of home buying is negotiating. A good Realtor will listen to his or her client, discover what is important to them and explain all possible options. Ideally, the agent will communicate client intentions to the other party in a positive manner to arrive at a mutually satisfactory agreement. A home purchase is more than a financial event; it carries all the expectations of what a home should be from the buyer’s side. Realtors know this and are trained to objectively represent a client’s interest in an agreement.
#13 Critical mistakes to avoid before closing Homebuyers should talk to their Realtor before making a big financial purchase before closing on a home. In the financial loan approval process, there are several critical mistakes to avoid before the final closing such as: buying a car on credit, depleting assets, opening credit cards, or changing employment. Any of these actions could change or cause denial of the buyer’s financing.
#14 Consult with a REALTOR early in the game First-time homebuyers should not rush into buying a home. They should talk to their Realtor as much as a year ahead of buying time, if possible, to develop a solid plan. An advanced consultation allows the Realtor to discover more options so the homebuyer can feel secure in finding that first house to call home.
#15 Do I need to sell before I buy? Homebuyers should plan with their Realtor on their current residence when moving up or downsizing. It is a common concern whether homeowners should sell their home before purchasing a new one. An experienced Realtor can look into options and solutions to this common challenge. Buyers should be sure to communicate their intent when moving and consult with their Realtor on the sequence of selling and buying homes.
This list of tips is a great tool for potential homebuyers to reference, but it is not comprehensive. Buyers should consider hiring an experienced real estate professional to guide them through the home-buying process. To learn more about RE/MAX First, visit https://www.liveinokc.com.
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