You’ve Decided to Buy a Home

Great decision, but is it informed? There is much more to buying and owning a home than a simple ‘it’s time to buy’ decision – that is unless you happen to have so much disposable income that you don’t need to even think about the financial obligations. Do you?

Let’s break this down into manageable sections, Financial, and Labor. If you’ve been renting, you know about financial obligation concerning making monthly rent payments, your utilities bills etc. You probably haven’t had much hands on experience in the labor department though, and it is a large part of owning your own home.

Financial – a list of miscellaneous expenses associated with owning and maintaining your home:

  • Mortgage – Principal and Interest (PI) Usually quite a bit more that your rent payment, this is only a portion of your total mortgage the rest is taxes and insurance, combined it is known as PITI.
  • Property taxes
  • Homeowners Insurance
  • Utilities, including electric, gas (oil, coal, wood), water, sewer, refuge pickup, telephone – these are just the necessities.
  • Additional Utilities – cable TV, Internet connection, security service, and such possibilities as landscaping, pool cleaning the list goes on and on.
  • General Maintenance and upkeep, including painting, replacing worn out fixtures, etc.
  • Tools needed to maintain home – tool kit including, hammer, screwdrivers, pliers. Garden tools – lawn mower, edger, trimmer, ladder. Just to name a few.
  • Repairs – differs from general maintenance and upkeep, this is when the dishwasher, or the hot water heater actually stop working, usually causing considerable mess in the process. Or broken windows, damage from natural phenomenon such as earthquakes and floods.
  • Home improvement – adding that extra bath, or the pool you’ve always dreamed of are often quite a drain on your bottom line.

This is the perfect time to set up a budget!

Labor – The hands on manual portion of buying your home and maintaining it afterward.

  • Yard maintenance, including mowing, gardening, pruning trees and bushes, weed removal, leaf removal, and snow removal, etc.
  • Exterior maintenance, including, painting and associated preparation for painting, cleaning gutters, cleaning and maintaining decks and walk ways, fence repair, cleaning siding, moss and mold removal, weather proofing, etc.
  • Interior maintenance, general cleaning (it will probably be larger than your apartment), replacement/repair of leaking faucets, windows, doors, carpet and floor cleaning and care. Painting, replacement of electrical fixtures, sockets and switches, up keep on heating and cooling system, including filter changes, duct cleaning and insulating.
  • Unexpected repairs, including water damage, appliance replacement, fire or smoke damage, weather damage, even the fist through the wall needs to be repaired (most likely the fist and the wall)

The task is not as daunting as it seems, and is in fact very rewarding. Now you have the information, and the resources to make an informed decision to buy a home.

Qualifying for a Mortgage

Within moments of your first interview with a real estate agent, you’ll here the words “Prequalified or Preapproved for a mortgage“. Now isn’t the time to run for the hills. Most home buyers, buy with the help of a mortgage. So unless you can dig up a few hundred grand from the back yard, sooner or later you’ll need to speak with a mortgage lender. Don’t fight it. Here’s why:

In your home search;

  • Helps to set your spending limit
  • Allows you to focus your search realistically
  • Aids your real estate agent in selecting homes for you to view.

In your home buying negotiations;

  • Gives you an edge against a competting bid for a home, if the other buyer hasn’t been approved, the seller now knows that you can follow through on the purchase.
  • Shows that you are a serious home buyer.

Do’s and Don’ts of selecting a mortgage lender.

  1. Do look at your credit prior to speaking with a mortgage lender, there are several websites that allow you to check your credit report, if there are any blemishes or errors, get them fixed, not doing so could very well cost you money, high interest rates or keep you from buying altogether.
  2. Do ask your real estate agent for his/her recommendation, you should get at least 3 names.
  3. Do interview the mortgage lender, ask questions, and if you’ve never had a loan, take along someone you trust who has.
  4. Do look at the mortgage companies fee schedule. (amount they charge to loan you money)
  5. Only when you’ve narrowed your search down to 2 companiesdo you let them pull your credit report.
  6. Do ask the mortgage lender if they will provide you with a preapproval (prequalification) letter.
  7. Don’t go from company to company letting everyone check your credit. (it will bring down your score)
  8. Don’t settle for just one name without researching, it could cost you hundreds of dollars.
  9. Don’t go out a buy a car, furniture or other high ticket items after you’ve qualified for a mortgage. Nothing kills a deal faster.
  10. Don’t switch mortgage companies in mid transaction.- Some times it may be necessary – closure of mortgage company, etc. but in the long run, it causes delays in closing and usually irritates everyone involved in the purchase of your new home.

You are a Savvy Buyer and this is your future, be in control. Not just of the home you buy, but of the people you choose to do business with.