Ten Tips Every Home Buyer Should Know and Understand
When people buy a home most tend to do some bit of research before actually getting serious about the process. However, there is quite a bit more in terms of buying tips home purchasers should be aware of but frequently are not. There were ten critical tips that were shared, by Dottie Herman and Eric Tyson, on the June 2nd broadcast of “Eye on Real Estate” radio show. Herman, the CEO and President of Prudential Douglas Elliman, and Tyson and real estate mogul and best-selling author, discussed real estate topics for listeners near and far.
These tips include:
1. Affordability – Buyers should before even beginning discussion what they can truly afford in a house and what they cannot. This rule is critical to avoid getting locked into a house that will end up costing too much and will eventually end up in a foreclosure down the road. The bank, mortgage broker, and real estate agents won’t always watch out for this. Many times the fees and initial interest pay off any loss risk they might have before the loan is sold off to another lender.
2. Map Out Personal Circumstance – The same way a homebuyer determine affordability ahead of time, he should also understand every aspect of his personal circumstances. This includes all other liabilities, income, demands, expectations and future financial plans. All have an influence on buying a home.
3. Comfort Level – Buying a home also needs to be as stress free as possible. A home buyer will not be in the right frame of mind to buy the right home for his needs if he’s worried about holding onto a job, expecting a child in a month or two, trying to close a major deal, or deal with a divorce. Life has many moments of stress and moments of calm. Buying a home should happen during periods of as much calm as possible.
4. Avoid Salespeople – It never fails. A party goes into buy a home and gets hammered with ten to twenty different sales pitches before the home purchase is done. This can include insurance policies, pest contracts, warranties, alarm systems and even landscaping. Every opportunity to leverage another sale is attempted by home sellers and their affiliates.
5. Hire a Good Financial Planner – This seems like an odd tip. Why does someone need a stock picker to a home purchase? It’s not quite that sort of situation. A financial planner provides a valuable service in looking a one’s financial activities from an outside perspective. A planner can point out where advantages or disadvantages exist, which can thousands of dollars in differences from taxes to real estate investment.
6. Hire Top-Notch Real Estate Representation – Did you know buyers can have real estate agents as well as sellers? It’s true, and those agents get paid by the sale, not out-of-pocket, just like the seller’s agent. Having a good agent, mortgage analyst and home insurance company can make the difference in avoiding home-buying problems or being buried in them.
7. Buy and Refinance? Hold On – Most refinancing costs $5,000 to $10,000 by the time a deal is done. So a homebuyer needs to ask himself, will the change in loan interest recover enough in two years to not only offset that cost but create a cost avoidance of the same amount? If the answer is no, then refinancing should be delayed until a better opportunity comes along.
8. Look for Automation – An electronic, schedule mortgage payment keeps a homeowner on track with his home loan. Without that deadline automatically charging an account, a homeowner could be tempted to delay a payment one month a few days when times are tight. That becomes the start of problems.
9. Still Save and Save Some More – A home purchase may seem to suck up any available money, either in a down payment or related expenses like moving, furniture, accessories and even room paint. However, putting back an emergency fund in one’s savings account as quickly as possible is critical.
10. Mortgage Insurance – Skip It – Agents will push mortgage insurance as a necessary part of the home buying process as a safety net for a home loan. However, it’s not necessary. Instead, a good life insurance policy will truly help provide a financial safety net for a family if income is lost and a mortgage is in jeopardy.
There are also a few after-the-fact issues homeowners should be aware of as well, according to Dottie Herman and Eric Tyson. First, don’t take increases in property tax assessments lying down. Many county assessors change tax rates from behind a desk, never truly evaluating the value of a property versus its actual market worth. When an assessment goes up, an owner should fight it if it seems extreme. Holding onto purchase documents is a smart idea as well; it allows for a true documentation of what a home gained in value when sold later on. Finally, buyers need to purchase the home they truly want within their means. Buying something less will result in immediate dissatisfaction soon after. And given all the money involved in a typical purchase that would be a huge waste.