Ah, the power of social media.
I was shocked – shocked, I tell you! – when I was informed, via Facebook, that my 10-year high school reunion is coming up this summer. How could it be? I don’t feel 28 years old! (Give or take a bit.) Especially not in comparison with many of my peers, who have already taken on mind boggling commitments like marriage, children, and home ownership.
Quite frankly, my life right now resembles a slightly more optimistic episode of “Girls.” With more student debt and less inclination to “settle down” than I’d readily like to admit on such a public forum, I’m certainly in no position to think about home ownership at this point in my life.
But you might be.
And what I’ve been hearing is that now is a pretty good time to buy a house, if you can pull it off. Citizens Bank sent along some tips for prospective homebuyers, so I thought I’d share them here in case any of my readers could benefit from such advice. I read Dave Ramsey because I am a glutton for guilt interested in personal finance, and this seems to echo a good deal of what he says, too.
– Determine your purchasing power – Know how much you can afford to spend on a house before you start looking in order to help you focus on houses in your price range. How much can you afford to spend depends largely on your income and current monthly debt payments.
– Secure your credit report – Get a copy of your credit report to determine if there are any potential issues that need to be addressed and corrected before applying for a mortgage. To order your free annual credit reports, call 1-877-322-8228 or visit www.annualcreditreport.com.
–Do your mortgage homework – Especially if you are a first-time buyer, take the time to learn important mortgage and home-buying terms and understand their meanings. Investigate the details – are there additional costs, such as origination or application fees?
– Get pre-approved – Complete a mortgage pre-approval assessment before you start your search so you know approximately how much money you can borrow from your lender. Many sellers require a pre-approval letter before reviewing a buyer’s offer. After you apply for a loan, avoid doing anything that would negatively impact your credit score such as opening a new credit or charging large amounts. This is true even after you receive the initial loan approval. Your credit report may be pulled again before loan closing.
– Select a real estate agent – Work with a real estate agent who can make the home buying process easier and more efficient. A real estate agent will match you with the homes you can afford and those that suit your preferences. They know the market and will negotiate with the seller to get the best price possible.
– Buyer’s checklist – Use a home buyer’s checklist at each house you visit to keep track of important features like amenities, neighborhood and schools. This helps you compare notes and remember the differences and characteristics of each house, especially if you visit several houses in different locations.
– Know the market – Knowing the facts is key to paying less and it also will improve your negotiating strength. When you know local market and home values, you are less likely to overpay for a property. Use the Comparative Market Analysis (CMA) and full MLS listing details of the most similar comparable properties to help you know how much you should offer. And be on the lookout for owners who are eager to sell and willing to negotiate – this can save you thousands of dollars.
– Home inspection – Hire a professional home inspector to determine if there are any potential problems that may be expensive to repair in the near future.
– Have a backup plan – You and the seller may reach a stalemate when negotiating. Consider developing a back-up plan just in case you are unable to reach an agreement. Define your maximum offer and do not go over it – there are almost always other homes that will meet your criteria.
