Congratulations on your decision to buy a home. The process can be stressful and tiring, but it also is fulfilling and rewarding especially if you know how the deal is done. This guide is intended for beginners in the US home buying market.
If you have decided to buy, the first thing to consider is, "What kind of residence do I desire to buy?" This is very important, because you don't want to buy a home that is too small, or too large. You might be able to afford a six-bedroom house, but you might not need a six-bedroom house. If you are a single person do you need all that space? Would a condominium be a better buy? How about if you are married? So now you are a couple. But what if you are going to have children? While that's an event which may not have occurred, or might not occur, how will you plan for that?
Getting a mortgage
A mortgage is a loan granted to buy a piece of property. This is usually secured through a loan company or bank. To obtain the loan, you will have to go through an application procedure. Your credit will be checked, inspections will have to be performed on the property. Once these things are accomplished, the seller and the buyer go to a closing to sign the appropriate transfer of ownership papers. This is usually done through a mortgage broker, and the deal is sealed at a title company.
Getting your credit ready for inspection by a prospective loan institution is key to getting the financing for your home. Unless you are independently wealthy you are going to need their help. There are several major credit companies which can provide you with a report. Usually there is a small fee for the report unless you have been recently turned down for credit. But you need to get a copy of the report regardless because it will tell you where you stand on a credit basis.
Once you have obtained a copy of your report and have deciphered it you next want to fix any discrepancies that appear. If you get them fixed first, then you won't have to do it later when the mortgage company requests a clarification. And they will. This is where you can really get ahead of the game. A little known fact can help you out here. You are allowed by the Fair Credit Reporting Act to attach a statement to your credit report. This can be up to 100 words and explains all the discrepancies on your report. It doesn't excuse them, but explains them. Believe it or not if you have a couple of late payments on a credit card it can hurt you in obtaining the loan or cost you more in the end at the closing. An explanation that you were perhaps out of work, or just got behind might save the loan and the additional points you will have to buy.
Finding a real estate agent
There are many real estate agents in every city, so you will have a choice of whom to work with. Make sure you find someone who is reputable, and with whom you feel comfortable. Once your agent knows what kind of property you want to buy, he or she will begin to show you properties. There are things to bear in mind, and questions to ask, when you look at a property:
- How old is the furnace/air conditioning system? Air conditioners and furnaces are built to last between 10 and 20 years.
- How old is the roof?
- How old are the appliances, and will they be staying in the property?
- What are the neighbors and the neighborhood like?
- In certain properties, like condominiums or townhouses, you will have to pay a mainenance fee. What is the cost of maintenance if it is provided? What does the maintenance cover? What it usually covers is lawn maintenance, water, sewer, use of common facilities, etc. This will vary so be sure that once you ask it of one seller you apply it across the board. Remember this will not be rolled into your mortgage payment, it will usually be a separate payment you will have to pay. It also may have a different due date.
Getting a property inspector
The inspection is very important. It will uncover items you couldn't have known of previously and alert you to possible problems in the future. The inspector should be licensed in a few disciplines such as plumbing and electrical as well as building code inspection.
You can find a list of inspectors in your local Yellow Pages. What they will do for a fee is inspect the appliances, the electrical integrity of the house. They will also inspect the roof, air conditioners, as well as structural items. If they are really squared away they will even bring along a termite inspector to look to for termites.
After all the inspections are done you will be given a report to deliver to the seller and a fair amount of time will be set up for the seller to fix the problems found. The seller might not agree with your inspector's work. That's fine, let them hire their own yet remember you as the buyer are in control. If the seller doesn't agree or refuses to fix the problems found, you have a legal reason to break the contract and forego the sale.
