Introduction: Tips for Buying a House
According to the Daily Express, a very popular UK newspaper, a 2014 study showed that three people devoted a mere 30 minutes to picking out their new house.
Image Source: Daily Express
This finding is quite startling, being that purchasing a property is, in many cases, a person’s biggest and most significant financial transaction.
One would think you’d spend considerably more time before buying a house than it takes to do the laundry.
Image Source: BigStock
The home buying process shouldn’t be rushed. You should learn about what to look for before buying a house, as well as the steps involved in this process – a course that can be as much exhilarating as it is daunting.
Here are some basic tips for buying a house – ones that will hopefully help guarantee that once this important transaction is made, you’ll be left with nothing but gratification and pride at being a successful homeowner.
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(1) Set a realistic budget
As antsy as you might be for your home buying process to start, before you begin looking around, it is vital that you know your budget.
Out of all the things to consider when buying a home, this should be the first one you cross off your “buying a house” checklist.
You will waste precious time if you start house-hunting without knowing what you can afford and, much to your dismay, what you cannot. But determining what’s in your price range doesn’t simply involve checking your account balance or looking at your pay slip. You need to be able to answer three very important questions before you buy a house:
How much can you comfortably afford to take out of your pay check?
A lot of people ask, “What should I know before buying a house?” Well, the immediate answer is simple: you ought to know what you can spend on it.
Your aim should be to make an estimate of the kind of monthly payment you can actually afford – a sum which doesn’t compromise aspects of your lifestyle that you aren’t willing to sacrifice in the name of homeownership.
Here is the part where you need to talk with your lender. If you plan on being a successful homeowner, it’s of the utmost importance that you’re certain you’ll be good for the payments in the coming years.
How do you calculate what monthly home payment you can afford?
Actually, first you have to calculate your monthly expenses — and don’t just stop at utilities. Make sure to budget for unexpected expenses and emergencies.
You also need to take into account any moving and/or maintenance expenses you might have. When you think you’re done listing all possible expenses, add something extra, allowing some wiggle room.
What kind of down payment are you good for?
Taxes, insurance, bank processing fees, possible expenses incurred by real estate agents, and other closing costs, normally amount to 3 to 7% of the whole loan value.
After you deduct this expenditure, you can finally determine how much cash you have for the down payment.
The down payment normally varies from 5% to 20% or more. However, keep in mind that if you plan on putting down less than 20%, you’ll probably have to include private mortgage insurance (PMI) to your sum of outgoings.
Add this to your list of things to check before buying a house, and find out how much that PMI would amount to, so that you can factor it in when you calculate your monthly expenses.
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(2) Get the low-down on the U.S. real estate market
One of the most valuable tips for buying a house is to pull up your sleeves and do some research yourself. You might be planning on using the services of a real estate agent. Conversely, you may be thinking on braving the world of real estate yourself and flying solo in your pursuit of the perfect home.
Whichever way you choose to go about it, make sure that before taking further steps to buying a house, you do yourself a favor and read up.
Find out how the real estate market works, especially if you’re new to the world of property or if you come from a different country. The way the U.S. does things might vary from the way you do things at home.
In fact, each U.S. state has different rules when it comes to buying real estate. There might be a variance in the kind of contract used, how closing a sale goes down, and also what the duties of a buyer and seller are.
If you’ve already decided you’re going to go with a real estate agent, you might think that you’ll leave all the nitty-gritty to them. They know best, right? Well, at the very least, before you hand them the reigns, get to know some of the key U.S. real estate practices:
Agent fees
The norm is for buyers to pay the real estate agent for helping them locate the house they wanted. Normally, the agents require a percentage fee from the total price of the house agreed upon.
On the other hand, in the United States, it is the seller who deals with agent fees. The agents get their sales commission from the sellers, not the buyers. Therefore, having an agent scout properties for you and showing you around shouldn’t cost you anything.
Agent license
U.S. real estate agents are required to be licensed in order to operate. So, if you’re working with an agent, make sure they have a real estate license.
It’s also good to note that each U.S. state’s licensing laws vary. They differ in regards to what type of education is needed, the sort of examinations the agents undertake, and what supplementary courses they have to take before they obtain their license, if any at all.
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(3) Keep in mind what the function of the house will be
What to look for when buying a house depends on how you’ll be using the property. Many prospective buyers are at a loss about what to consider when buying a house. If you’re in this situation, you should first determine why you’re setting out to purchase real estate.
Flipping through property magazines and real estate websites could leave you feeling more whimsical than your normal self. You might very well fall in love with a cute, little house from a picture in a real estate magazine and throw your “buying a house” checklist out the window. Don’t.
So, what to do before buying a house? Pace yourself. Plan. Think ahead. Ask yourself these questions:
- Will this house be a residence just for me?
- Will it be home to my future or growing family?
- Will it be a vacation home?
- Will it be a short-term residence until I can afford something better?
It is only when you can confidently answer these questions that your search for a house becomes easier. Knowing what function your house will serve is arguably one of the tips for buying a house that is most disregarded. But how can you know what to look for when buying a house if you aren’t sure of how you’ll be making use of that space?
The sooner you determine how your property will be used, the better your agent’s scouting becomes. And the more information you provide for them, the better they’ll be able to guide your property search in the right direction.
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(4) Shop around and take your time
You aren’t buying drapes for your living room windows. You’re buying real estate. It’s a big deal, so aim to be a sensible buyer. Don’t pounce at the first charming place your agent takes you to see. Even if there aren’t plenty of fish in the sea, do your best to check out all, or at least many, of the available properties that fall within your budget.
Even though you may have already established what to look for when buying a house, you might be surprised at how many things you could have overlooked. If you’ve set your heart on a particular place, don’t skimp on that second visit. Instead, use it to re-check the property while answering the following questions and any others you might deem crucial:
- Are you happy with the parking?
- Do the neighbors seem friendly or at least tolerable?
- Is there access to local transport?
- Are amenities close?
- Is the neighborhood appealing to you?
You might find that the answer to one or more of these questions is “no,” and that might be a deal-breaker for you. But it’s good to realize that before the deed is done. Steering clear of hasty decisions means avoiding serious problems in the long run.
(5) Remember setbacks are a reality but not the end of the world
The actual shopping around process is probably one of the steps to buying a house that prospective buyers most look forward to. Nevertheless, one ought to be prepared for disappointment and frustration.
Things don’t always go the way we envision them. Your agent might show you a million places, without you feeling excited about any of them. You might end up feeling exasperated. But don’t be disheartened. The right fit is out there.
Most importantly, if at any point you feel discouraged and tired of the whole home buying process, take a step back and suspend your house search until you’re feeling up to it again.
House-hunting can quickly go from thrilling to exhausting, and your weariness could lead you to make a rash decision you might eventually regret – that of purchasing a property that doesn’t really fit your ideal-house profile – out of sheer fatigue and general dissatisfaction.
As far as tips for buying a house go, this is perhaps one that most homeowners can tell you from their own experience but which tends then to be forgotten or ignored. It’s not just about what to look for when buying a house; it’s also about knowing when to take a break from all that looking.
Image Source: BigStock
(6) Negotiate to the hilt
If there isn’t an agent in charge and you’re the one doing the closing, then be prepared for some serious negotiation.
All the times you’ve asked yourself, “What should I know before buying a house?” you’ve probably never thought of mastering the art of haggling. Do your homework. Ask around. Find out what a decent offer is and how much you can actually push for.
If you don’t think you can stomach the stress of the negotiation process, or if you feel you don’t have a knack for haggling, try to get someone to do it on your behalf – a persistent father, maybe, or a convincing partner.
Don’t be a victim of the haunting question, “What if I’d pushed harder?” especially if you strongly feel the property is worth less than the seller’s asking price. And make sure to take into account any possible repair costs before settling on a price.
As soon as all the papers are signed and you become an official homeowner, give yourself a well-deserved pat on the back. In the meantime, if your quest is still in its inception stage, good luck; hopefully, these steps to buying a house can serve as an initial guide to your home buying process.
Chances are, though, that when you emerge from said process as a successful homeowner, you yourself will have a unique set of tips for buying a house based on your own house-hunting experience.
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