Some things to consider before you hit that first open house
The Economics of Buying a Home
by Debra Karplus
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According to the National Association of Realtors, the purchase of a home is one of the biggest financial transactions that an individual or couple will make, and at approximately $100,000 or more, that really isn't any surprise. Perhaps you are considering buying property, such as a house or condominium.
People are motivated to buy a home for numerous reasons. Perhaps you are a first-time buyer and have always dreamed of owning your own home. Possibly you already own a home, but your growing family creates the need for a larger place or a neighborhood with good schools or more parks. Maybe you enjoy outdoor living and want a piece of property where you can live outdoors with a patio or deck or room for a garden for flowers or vegetables and even fruit trees. Or perhaps your neighborhood appears to be on the decline and you simply want to get out while you can.
Should you sell first and then buy?
Financially, you may be smart to sell your current home before buying something new. If you are even just casually considering a move, delve into getting those little repairs done from your bucket list now! These days, many potential sellers are hiring professional home inspectors to do a pre-listing inspection. For a few hundred dollars, this is an excellent way to make your home more marketable.
If you can afford to buy before selling, you are taking a bit of a gamble that you will own two properties for some period of time until yours sells. You will be paying utilities, real estate taxes, and home insurance on both properties, not to mention keeping two places mowed in the summer and shoveled in the winter. However, if you opt to buy and then sell, you can move in slowly if your move is within the same town, and you won't have the disruption of potential buyers coming through your home at inopportune times.
Getting pre-approved for a mortgage is an excellent first step in expediting a speedy home purchase process.
Since the 2008 housing crisis, lenders are much more stringent on lending money for purchasing a home. Make sure your personal finances are in good order, that you are current on your taxes, and that there is nothing suspicious on your finances that could red flag a banker.
Then search online to see what the mortgage rates are right now, as they change frequently. Start by contacting your own bank but definitely do shop around and contact other lending institutions in your area. Remember that rates vary from bank to bank. If you buy first and then sell, your banker will set you up with a bridge loan.
Engaging a realtor is not necessary for the buyer.
Realtors earn approximately five to six percent from the seller, not the buyer. Begin your home search by making a list of what you are looking for in terms of price, age, size, number of bedrooms and bathrooms, garage, basement, neighborhood, and other variables. Search the local sites such as Zillow.com, Truilla.com, and Realtor.com and sign up for updates. This will help you considerably in figuring out what you want in your new home. If you are seeking a condo, be sure to find out about homeowners association (HOA) fees and what amenities come with those fees, such as lawn mowing and exterior repairs like siding or a new roof.
Calculator: How much mortgage can I afford?
Be sure to consider not just the house and property but the location. Possibly you need to be near local bus lines or your place of work or desire to be closer to your church. Once you target specific neighborhoods where you might like to buy a dwelling, contact people you know and ask them about the neighborhood. Also, you should have them alert you when a property near them is about to go on the market for sale.
Using an attorney is not a requirement, but is definitely the smart thing to do.
Spending approximately $400, depending on where you live, will help the house closing process go smoothly by hiring someone who is working on your behalf and knows the subtleties of home purchase contracts. If you don't use an attorney, you may end up paying a lot more than their fees if the transaction is not handled properly legally, so don't try to save money by avoiding an attorney. And be sure to use someone who specializes in house closings, as many attorneys do not.
And finally, do not be in a hurry to buy property. Take your time and you will make a financially sound decision and actually enjoy the home buying process.
Debra is an occupational therapist, accountant, teacher and freelance writer. She is a writer for Advance for Occupational Therapy Practitioners. She also writes for Grand Magazine, has some items (fiction and non fiction) selling on Amazon.com (kindle), has written several travel articles for the Champaign-Urbana News-Gazette and several articles for freelancewriting.com. Learn more about her at DebraKarplus.blogspot.com.
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