So you've decided that you're ready to buy a home--- CONGRATS!!!!
It's an exciting time in your life, especially in looking at homes online and clicking through hundreds if not thousands of home listings, paring down the massive selection to the ones you think you might like if you could just set foot inside. All you've got to do is call an agent to get inside, right?
Well. You're right. Sort-of.
Here's 5 things you need to do before heading out the door to visit a home in person.
1) Talk to a real estate agent. Wait. You knew that, right? But what we're saying here is that you should be working with an agent leading up to going and viewing a home in person. You should have sat down with your agent to discuss the plan of action (which should include #2-5 of this list!) where he/she will walk you through the actual process of what happens from sending an offer in on a home to what will happen after you close on it. Merely calling an agent off the internet to "let me see that house" can set up an expectation that that's now your agent you would be working with for your subsequent home search. Take the time before you meet with an agent in the driveway of a random home for sale to get connected with an agent you like and trust to walk you through the home search process. If you clicked on someone on the internet, and they are willing to jump in the car (even if not for a few days or weeks) to meet you at properties without even walking you through the process... You are making a huge mistake. A real estate agent that TRULY cares about the sound decision of the MASSIVE financial decision you are headed towards will make it a point to take the time to meet with you in person and discuss what is not only next, but all the steps that would eventually get you until closing.
2) Find out the cost. So you used an online mortgage calculator and figured that the payment on a house at $250,000 is "what I can afford." Cool. But while those mortgage calculators are quite fantastic, there is so much more to the magic recipe of how much the mortgage will cost you that only sitting down with a real-deal mortgage professional will able to quote you the actual numbers.
What type of loan are you going for? Will you be required to put any money down? Who will orobably pay the closing costs? What ARE closing costs? How much is the homeowners insurance for that area? How does escrow work? Are taxes prorated or just paid up through the year? Is a 15 year loan better to take out at the beginning, or should I just take a 30 and try to pay it off in 15?
These are all excellent questions that you want to be able to understand and factor in to seeing what the cost of the house will truly be. So often, home searchers (those hoping to buy) spend so much time looking for the home to buy, then talk to a mortgage professional after they find it and now suddenly need documentation, on the fly, to put in an offer. Because yes, your offer needs to have verification from a lender that your offer is even viable (ie, that they would loan you money in the amount you are offering). But imagine this: the Perfect House (see what we did there?) hits the market and within the first day has an offer in--- you can't even throw your offer into the ring to compete against the other offer without a pre-approval letter from a mortgage lender. And even if you find a home, months after it's been on the market, thus aren't worried about competing--- you still can't even put in an offer without the pre-approval letter. In essence, finding the house first is definitely putting the cart before the horse!
And, not to sound like the bad news bear... but going with the first and only person you've spoken to--- is probably one of the most costly mistakes you can possibly make. There's so much to your payment, from PMI, to origination fees, to points, to what gets tossed to the closing table, not actually comparing all of that from one mortgage lender to the next can COST YOU BIG. And it's not just your monthly payment. When you consider what gets "rolled into closing" but not until you go to sell your house years later (or sooner), there's A LOT of money on the table that you likely don't understand. You MUST interview multiple mortgage lenders if you really want to make sure you are making a TRULY sound financial decision.
3) Understand the difference between Appraisal and Home Inspection.
Some of you reading this will say, "Well yeah." Others will say, "Huh?"
We'll talk to the "Huh"-people, on this one. In short, the appraisal is done for the bank to make sure that the home is worth the mortgage being taken out. The home inspection is done to check out the "bones" of the house, and the report comes to you to let you know the ins and outs of the house: from the age of the roof to functioning of the switches in the home. For more on this, check out On The House.
4.) Research the "Location, location, location!":
What is important to you: A good elementary school? Quick commute? Wide streets? Being in a culdesac so your kids can play roller hockey outside?
There's a 99% chance these things won't change from when you see the home to when you close: The school district the proposed home is in will be the same. The distance from work to the home would be the same. The streets won't widen in the next ten years... well, probably ever! And a main-street house front doesn't just slide over to a cul-de-sac from a main street.
They say "location, location, location!" because it's an important thing that won't change. Ask yourself before you go.... "Are these things that are important to me.... truly important?" as you don't want to "fall in love" with a home that otherwise doesn't fit what is truly important to you. Walls can be taken down, paint redone, bathrooms and kitchens renovated--- but the location will stay the same.
5.) Take a deep breath.
Yes, an easy one! Make sure you're prepared when you go: wear comfortable clothing, take a note pad and pen, make sure your phone is charged (check with your agent to make sure you're able to take pictures at the property---- if it's occupied, there may be obvious issues with taking pictures that includes people's belongings/pictures while people live there)... If you're meeting your agent there, be sure to get there on time but don't approach the door until your agent arrives (especially if the home is occupied!). Your agent should let you know what to expect on "The Big Day" of looking at homes--- listen to what they tell you, and enjoy the moment. Who knows--- this could be the first time you're stepping foot in the home you'll be real-deal living in soon!
Are you ready to look at homes? Or do you have some work to do? No matter where you are in your home buying process, we're truly here to help you with any questions (see #1!). Please feel free to reach out to us with any questions, comments or concerns. We truly enjoy helping!