Buying a house for the first time is equal parts exciting and nauseating. On the one hand, you’re thrilled about the prospect of owning your own home. On the other hand, you’re scared to death of all the things you don’t know about the process. But the more educated you become, the less fearful you’ll be.
4 Things to Know and Consider Before Buying Your House
If you’re contemplating buying a house, you aren’t alone. Millions of Americans buy and sell real estate on an annual basis, and each one of those Americans once went through the process of buying their first home. So you aren’t alone. Here are some of the different factors and stages of the process that they would encourage you to focus on:
1. Realtor Selection
Real estate agents are a dime a dozen. You have hundreds to choose from in your own city. But only a small percentage of them are actually worth working with.
Behind every good real estate agent, you’ll find a carefully blended assortment of technical and soft skills. As you compare different agents, consider qualities like:
- Good communication skills (should be easy to reach and willing to keep you in the loop each step of the way)
- Multiple years of experience working in your specific market
- Positive reviews and testimonials from past clients
- Good personal rapport and likability
Most people find real estate agents through their personal or professional networks, but you can also research top rated agents online.
2. Shopping Mortgages
“Home loans are available from several types of lenders — thrift institutions, commercial banks, mortgage companies, and credit unions,” FTC.gov explains. “Different lenders may quote you different prices, so you should contact several lenders to make sure you’re getting the best price. You can also get a home loan through a mortgage broker.”
When comparing mortgages, make sure you’re comparing apples to apples. It’s easy for one mortgage to look more attractive than another, but to actually have worse terms. Take all factors into account, including the mortgage interest rate, points, closing costs, and PMI (if applicable).
3. Preparing for Added Fees and Expenses
The home buying process is filled with added fees and expenses. It’s one of the frustrating aspects of buying a house. You think you’re done shelling out money and then there’s another unforeseen expense.
You can make buying a house much less stressful and more palatable by preparing in advance for all of these added costs.
In some countries and regions, you have to pay stamp duties. Then there are various costs like:
- Loan origination fees (0.5-1 percent of the total value of the home).
- Closing costs (between 2 and 5 percent of the value of the home).
- Escrow funds to cover property taxes and insurance
- HOA fees (if applicable)
This list isn’t meant to scare you, but it should put you in the right frame of mind so that you can prepare ahead of time.
4. Home Inspections
Regardless of whether or not a home inspection is required (almost all lenders will make you get one in order to protect the loan), you should make this a big priority and focal point of the due diligence phase.
Start by doing your own pre-inspection when seeing the home. You can learn a lot about a property simply by looking at it. Try light switches and outlets, look for water stains and signs of mold, study the foundation for signs of issues, check out the property’s slope and identify potential drainage issues, etc.
When putting in an offer, make it contingent on the property passing inspection. Then hire a thorough home inspector with a good reputation. This will identify most any issue the house has, immediately obvious or otherwise.
Are You Ready to Buy a House?
Buying a house isn’t for everyone. And with all of the different financial factors involved, it may or may not be the right timing for you. It’s imperative that you spend some time crunching your own numbers and reflecting on practical elements of the home buying process to determine your readiness. Because at the end of the day, it’s you who will be signing your name to those legally binding closing documents.