Buying a home represents the realization of a dream, but attempting to do so blindly can quickly become a nightmare. The right information will grant you a sense of control over this complex and expensive transaction. With that aim in mind, here are five things you should know before navigating the home buying process
1) Be Sure of Your Credit Score
Your credit score is of prime concern in your mortgage application. That three digit number not only determines the interest rates you can qualify for, it also limits the types of loans that are available to you.
The lowest score that can be accepted is a 500, the minimum threshold for an FHA loan with a 10% down payment. At 580, that percentage drops to 3.5%. A conventional mortgage, on the other hand, requires a credit score of at least 680.
The type of loan, the interest rates, and the down payment percentage, can dramatically alter the ultimate cost of your purchase. An accurate, up-to-date credit score grants the basis for a realistic understanding of your qualifications and your needs.
2) Don’t Choose a Lender Without Comparison Shopping
All mortgage lenders represent themselves as the best deal in town, but that’s obviously not true. Each of them will offer different rates, depending on your credit score and their own particular risk assessment.
You should always check different lenders to find the best rate. Your mortgage will last for decades. Even a few tenths of a percentage point difference in interest rates adds up to serious savings over time.
3) Understand the Full Cost of Buying a Home
The listing price makes up the bulk of what you’ll pay, but it’s not the final total. By the time you’ve ironed out the details of the contract, thousands of additional dollars will likely be added to that number.
The term “closing costs” is one you’ve probably heard. This represents a collection of fees that accrue over the course of any home sale. Attorney’s fees, taxes, title insurance, appraisals, all of these things are wrapped up in the closing cost.
Before you get to that point, you’ll have to pay a home inspector to check for damage and safety hazards. If anything serious is found, the cost of getting it repaired is also added to the grand total. That still leaves things like mortgage insurance, possible Homeowners Association dues, furniture costs, and moving fees.
Make a careful list of all the likely expenses, and add the total cost together to get the true expense total.
4) Have the Home Appraised
I mentioned inspectors, and this is where they shine. No matter how nice the house appears, no matter how new, there is always the potential for issues.
Home inspectors will comb the house from top to bottom. They check all of the key systems — HVAC, electrical, and plumbing — for issues of any kind. They also investigate the state of a home’s foundation and structural integrity. You need to know this for your safety, but also because the need for maintenance represents a hidden cost.
Don’t trust a seller to be forthcoming about any negatives. Besides the home inspector, consider also hiring a mold inspector and a pest inspector.
5) You Can (and Should) Negotiate
When you buy a house, nearly everything is negotiable. Your aim should be to get the best possible deal for yourself, so search for every opportunity to lower the price or gain some other advantage.
If upon inspection you find pressing maintenance concerns, consider asking the seller to pay for the repairs. This goes doubly for issues that impact your safety. If the owner is eager to sell, ask them to sweeten the deal by lowering the closing costs, or making some cosmetic upgrades so you won’t have to. You can even ask them to throw the existing furniture into the deal, if it’s to your taste.
Buying a Home
If you’re ready to buy a home, contact the award-winning Laura Wucher Real Estate Team today! Call our office at (925) 595-8047, or email by clicking here. It only takes a moment to get started.