Buying a home is a major life milestone. It’s a huge financial commitment and a commitment to your future. As such, it can bring up any number of emotions — excitement, hope, fear — all of which can add stress to an already heavy decision.
But you don’t have to go through it alone. Here are some tips and tricks to provide some peace of mind and make the process that much smoother.
Find the Right Realtor
A Realtor can be a valuable ally in your search for a home. They look out for your best interests, lend an experienced eye during home inspections, and provide expert counsel when it comes time to negotiate price.
Realtors are often mistakenly thought to drive up your costs because they take a commission of the price of the home. But the seller pays that commission, not the buyer. This is easily confused with a real estate agent, who may represent both sides of the negotiation and is not bound by the same code of ethics as a Realtor.
Shop Around for a Mortgage Lender
When it comes to your mortgage, you don’t have to take the first offer presented by the first lender you encounter. Just as you’re picky about the house, you should be picky about the lender who helps you pay for it.
Don’t be afraid to ask questions. These should include:
- What level of down payment is required?
- How long will it take to get preapproved?
- What lender fees do you charge? (These may include commissions, points, credit reports, and appraisals.)
- Are you willing to waive any of the fees?
Secure Your Financing
There are a number of important boxes to check when setting up your finances.
- Good credit. Lenders look at your credit score, and you should, too. Go over your credit report with a fine-toothed comb, because it may contain some errors. The Consumer Financial Protection Bureau’s free credit report checklist can be helpful in doing this.
- A solid budget. Your lender should be looking for that goldilocks amount — not too much, not too little. They can help you make sure those monthly payments fit within your income and that your budget also includes things like property taxes, utilities, and possible repair expenses.
- A favorable interest rate. These come in two flavors. A fixed rate carries less risk because it doesn’t fluctuate with the market. An adjustable rate can be enticingly low but has the potential to rise as the market shifts.
- The right loan terms. Fifteen- or 30-year mortgages are the most common, but there are variations within them. Short-term loans tend to have lower total costs and interest rates, but higher monthly payments, while long-term loans generally have the opposite.
Think About the Bigger Picture
It can be easy to become obsessed with the sticker price on the sign. But that’s just one factor to consider when buying a home. Don’t forget about taxes, insurance, and association fees, as well as renovations and maintenance.
Where do you see yourself and your family 10, 20, 30 years down the road? How long do you plan to stay in your current career? Will marriage and kids be part of the picture? These are some of the questions you’ll want to keep in mind as you begin this journey.
Don’t Sweat the Small Stuff
The costs of your new home go well beyond the big-ticket items like a mortgage. As soon as you have the house, you’ll likely need to fix it up or want to give the appliances and fixtures an upgrade. Make a list of these costs and add them to the total price before you buy.
A common mistake when calculating these costs is to leave out one key item — labor. It’s easy to price out granite countertops or central air conditioning, but the labor that comes with them can make the total price tag skyrocket.
Even though the process of becoming a homeowner can seem daunting, there’s an easy way to shake off the nerves and begin this exciting journey — start saving today. But how much will you need? USALLIANCE’s mortgage calculator can give you a snapshot of the road ahead.