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  • Matt Wright

Some Things To Know Before Buying A Home

Buying a house can be a complex and intimidating process, and you need a professional at your side to answer questions and look out for your best interests. Once you know you can afford to look for a home, let an agent or seller work with a pre-approved buyer. Four to five competing mortgage rates are more accurate than those you see on advertisements and websites, and banks offer real interest rates based on your credit profile, location and the value of the home you wish to buy. [Sources: 11, 12]

You will also need to review your credit and finance options, find the right real estate agent, make an offer, negotiate an inspection and prepare to move into your new home. Your mortgage lender may discuss various home loan solutions, but do your own research before meeting a bank. [Sources: 4, 11]

If you work through the 7 things you need to do before you buy a home, you will have it easier to get the house you want at the right price. The first thing to consider when buying a home is how much you will spend and how you will live there, which is important if you are a buyer. In addition to ensuring that your credit rating is in order, you also want to consider the money you need to make a purchase your first home a reality. [Sources: 4, 10, 12]

One of the biggest mistakes first-time home buyers make is purchasing more than they can afford. Estate agents talk all the time about the extra cost of buying a home. When you buy a home, there are significant upfront costs, including a down payment and closing costs. [Sources: 0, 1, 9]

To avoid falling behind when purchasing homes, real estate mogul Barbara Corcoran and other money experts suggest committing no more than 30% of the purchase price to residences to avoid falling behind. Estimate your monthly payments based on property price, down payment, interest rate, loan term, and other monthly mortgage costs such as homeowners insurance and property taxes. For example, a calculator tells that you're likely to be able to afford $250,000 for a home so try to save at least $12,500 for your down payment and $5,000 to $7,500 in closing costs. [Sources: 0, 11]

The rest of the cost includes paying property taxes on your new home for a year (if your down payment is less than 20% of the purchase price) and paying mortgage insurance. Your monthly payment can be split into 3 or 4 things, depending on what mortgage you get for your home. [Sources: 13]

There is no guarantee that if you are willing to buy your first home, you will need a good loan, cash and an almost verifiable income. Whether you've won the lottery, played professional sports or have wealthy relatives, you'll need a mortgage (yes, that's the word for a home loan) to buy a house. [Sources: 5, 12]

It makes no sense to look at a house worth $400,000 when you can afford a house that costs $150,000. There is little justification for buying a home with an estate agent, as both the agent and the seller pay the buyer a fee for their home. [Sources: 5]

There is nothing wrong with researching online property websites or opening a home on your own, but an experienced real estate agent is your best ally if you are serious about looking after your first home, especially if you have not yet gone through the process. As Ogles notes, working with an experienced estate agent can save you 2-4% of the list price. Before making an offer, you should have the house inspected to get a full picture of its condition. [Sources: 2, 5, 8]

Once you and the seller agree on a price, the house goes into trust, which is the time it takes to complete the remaining steps of the house purchase process. The types of fees you can expect include recurring costs such as property taxes, homeowner insurance, prepayment interest, title insurance, one-time charges, inspection fees, application fees, valuation fees, fees you billed and deducting your credit score. Things you need to do or pay for in the final stages of your purchase include a home appraisal (mortgage companies are required to do so to protect their interests in the home), a title search to ensure that no one other than the seller is entitled to the home, private mortgage insurance, piggybacking on a loan if your down payment is less than 20% and complete mortgage paperwork. [Sources: 0, 7, 9]

Buying a home involves looking for a property, securing financing, making an offer, viewing the property and completing the purchase. To deny the process so that you can get the most out of your purchase, here is a summary of what you need to consider before buying, what you can expect from the process itself, and some tips to make life easier when purchasing your first home. Buying a house from start to finish is good advice if you already know how to buy a home. [Sources: 1, 9]

Pre-approval of mortgages is a free, non-binding process that is offered only if you are a serious, qualified buyer buying your first home. There's no need if you want to shop for a home, but it can make things easier. [Sources: 5, 12]

If you are buying a house with a spouse or other co-buyers, your mortgage lender will take the buyer's creditworthiness into account during the application process. If your credit rating and your debt are not ideal, you may consider repaying your debt to improve your credit rating and save more money before you buy a home. Your house may also want to avoid applying for a loan (for example, a new credit card or a new car loan) before closing your new home. [Sources: 12, 13]

If you are planning on buying a home in Delaware please consider me as your buyer agent. I will make sure that all of your questions and concerns are answered and that the buying process goes a smoothly as possible.

-Matt Wright

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