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Looking To Buy A Home?
Buying a home of your own is one of the biggest decisions you'll ever make. And it's also the biggest financial commitment that you're likely to make. It's an important decision and one that can make a huge difference to your lifestyle now and your financial security in later life. The most obvious reason is that you'll be much better off in retirement if you don't have to pay rent. But owning your own home also gives you options that you otherwise wouldn't have.
- First thing to do is to determine why you are buying a home. Write down exactly what it is that you want in a new home. Whether you are currently renting and want to own a home or wanting to downsize or upsize. This information will be very helpful when you start working with your realtor.
- Talk to your credit union and apply for pre-approval. Unless you are paying cash for a house you will be borrowing money from someone. It is important that you understand how much house your can get approved for. You can submit an online application by clicking here.
- Meet with your realtor. Your realtor will ask all types of questions to enable them to find the perfect house for you. Armed with enough information your house search should go relatively quickly.
- Once you have found a house that you want, the next step is to put forward an offer. You must decide what is most important about the purchase of this home. Do you want the best price? Do you want to put little down? Do you want flexible move-in terms? Do you require repairs? While the obvious answer to all of the above is yes, you must take into consideration that the seller wants the exact opposite. The following are items that are negotiable in the real estate transaction.
So you want the best price possible for this house, what can you do? The first step is to request that your realtor show you what other similar houses are selling for and have sold for in the past. It may be that the price of the house is already below market (this can happen if the sellers are anxious to sell or the house needs repair). Let's assume that the house is listed at what seems to be fair market value. Here are some tips to attempt to get a better price:
- Pre-approval. By all means make sure that you are pre-approved with a mortgage lender before making an offer. Pre-approval assures the seller that you can afford the home and removes the possibility that you may back out of the transaction due to an inability to obtain a mortgage. Click here to apply online.
- Earnest money. This is the money you deposit with the broker when you make an offer. It is a show of how "earnest" you are about your offer. In general a larger earnest money deposit will demonstrate to the seller that you are serious about your offer. Sellers may be more inclined to consider a low offer if it is accompanied by a large earnest money deposit. On the flip side however is the fact that you are putting more money at risk.
- Days on Market. If your primary motivation is best price look for houses that have been on the market for a while. As time goes by sellers become more anxious about selling their home and may become more flexible on price. Of course the house may have been on the market for a long time because it is overpriced.
- Concessions. Don't ask for any. If you want the best price do not ask the seller to pay your closing costs or repairs. Also try to pay with cash or a conventional loan. FHA and VA loans require that the seller pay for a portion of the buyer's closing costs. This is money straight out of the seller's pocket.
- Possession. Be flexible about when you can take possession. This can be especially effective if the seller needs to find another home before moving out.
- Closing. If the house is vacant or the seller has indicated they can be out of the house quickly, go for the quickest close possible. Sometimes an ability to close quickly can get the seller to consider a lower price.
By all means make the offer contingent upon a professional inspection. While the seller is not necessarily obligated to make any repairs, it lets you the buyer know of any potential problems and gives you an opportunity to walk away from the deal if some serious flaw is discovered.
In today's market it is relatively easy to buy a house with little or no money invested (assuming adequate credit). With certain loan types (primarily FHA and VA) it is possible to have the seller pay your closing costs, pre-paids and even your down payment. Keep in mind that the more items the seller pays on your behalf, the less their bottom line. So expect to pay more for the house.
While most lenders no longer require a survey it is still a good idea to get one. It is better to know of any problems before buying the house than to discover them later.
In the end, whether or not you obtain this house and on what terms, depends solely on the ability of you and the seller to come to mutually agreeable terms. Sometimes it may not work out, so you continue looking and negotiating. Your dream home may be just around the corner!