How to Buy a Home
Buying a home is one of the most significant financial decisions that you will probably ever make in life. If you’re contemplating of entering the wonderful world of homeownership for the first time, make sure you are prepared.
Steps to Buying a Home
From figuring out your credit score requirements and mortgage options to finding a qualified realtor, there's a lot to learn. Before jumping the gun there are a number of things you should check before buying a home. As you search for financing and the right house, make sure you have a good credit score, minimal debt incurred and enough cash to make a down payment. This way you will make yourself as attractive as possible to lenders once you’re ready to get a loan. These are just some of the first steps to buying a home.
First Time Home Buyers
If you’re planning on taking the plunge into homeownership, there is plenty of advice for first time homeowners out there that you should keep in the back of your mind before you begin the process. Remember that the expenses don't end after the initial purchase, that's only the beginning!There is no better feeling than turning the key in a lock that no landlord has access to, or painting a kitchen with whatever bright color you desire, homeownership offer all sorts of freedom and privilege that renters never get to enjoy. Having said that, there are costs to know about, questions that need answers , and practical concerns to be dealt with to make your first abode a place of comfort, serenity, and financial security.
Should You Rent or Buy a Home?
Are you a renter who dreams of buying your own home, or a homeowner who is drawn to the perks of renting a place? The age-old debate of whether to rent or buy a home may be weighing on your mind if you find yourself fresh out of college or under tight budget.
Advantages of Buying a Home
One of the many advantages of buying a home over renting is that once you are on the property ladder (a series of ascending stages which people traverse as they are able to buy more expensive houses, the initial stage is buying your first home) you are able to use that your home as an asset which will help you make future property and home investments. Basically this means that if you make the right financial moves you can potentially trade up on your home every few years.
Advantages of Renting a Home
This process definitely isn't for everyone— buying a home is a massive financial burden— and if you aren't at the right time in your life or the market isn't particularly inviting, then renting could be a safer choice . In many cases renting can provide you and your family much needed time to build up your savings while waiting for the market to become more friendly to a first time buyer who might not have the credit to get a home loan or mortgage.
Financing a Home
First time home buyers can be overwhelmed by the steps and process of home financing . Knowing the basics and sticking to the guidelines can help you save a significant amount of time, effort, and money. Before you decide to go with a particular property in a neighborhood you like, you have to take a look at your finances not only to ensure you are getting the mortgage that best suits your needs but also to prove to lenders your capacity to make on-time payments. Make sure you are somewhat familiar with the terminology you'll be hearing when entering the world of home financing. Watch the video below for a brief explanation of some of the terms you should know:
Having a good mortgage broker or mortgage banker to back you up can reduce the difficulty of sorting through all the financing options. There's no shame in enlisting help with this very difficult and important decision.
Find a Home That’s Right For You
Homebuyers, first-timers and existing owners alike, will agree that maybe the most difficult step in the home buying process isn't saving for a down payment or getting a mortgage— it’s finding the right property to buy. There are pros and cons to each type of home but ultimately the one that will fit you and your family best should be a home that you can picture yourselves living in for at least a few years. It may take some time to find a home that’s right for you, and that’s okay, but don’t forget to do your research and ask for as much advice as possible.
Finding the Right Home Location
An integral part of house hunting is finding the right location to settle down. Just because a neighborhood is cheap, it doesn't mean you should invest there.
It is always a good idea to spend some time in a neighborhood that you are considering. Walk around, sit down at a cafe and observe. It's amazing how much you can learn about an area by observing its local hangouts. Watch the helpful video from Consumer Reports below:
House Hunting Online
While house hunting online is convenient there is a lot of information that listing sites won't provide you . Listing sites like Trulia are a great resource and should be used in conjunction with other free to access services (it might even be a good idea to watch some tv shows that will improve your house hunting skills ).
Buying a Fixer Upper
There is no middle ground when it comes to buying a fixer upper home. It’s either a complete nightmare, inundated with unexpected costs and disasters, or an extremely affordable home with lots of hidden potential .
What is a Money Pit?
A money pit is a home that might look like an attractive fixer upper but ends up being a constant financial drain. So, before you sign on the dotted line, make sure the "fixer-upper" you're looking at has been thoroughly checked by a host of specialized inspectors because spotting a money pit isn't easy. Make sure that the time and money spent renovating it can produce a like-new house that’s worth close to twice what you paid for it.
Buying a For Sale By Owner (FSBO) Home
Homes listed as FSBO or "for sale by owner" are homes that are sold directly from the homeowner without the use of a real estate agent. There are advantages and disadvantages to going this route but it is important to remember that buying a home without any professionals present can entail more risk.
FSBO: Pros and Cons of Buying Direct from Homeowner
Should you Buy an FSBO Home?
Buying a home directly from the homeowner can be an empowering financial decision. While there are some risks, it is also a very educational experience and will give you a better idea of how the homeownership process works and how simple it can be.