Saturday, September 7, 2013

Buying a house: Doing your research


Ever since I was a child I have wanted to own my own house, it IS the American Dream afterall, is it not? To me it has always been more than just "what you do when you grow up". I moved almost every year growing up, sometimes twice a year and I've always wanted the security of owning a house and having that place that is your own!

Being a young newlywed my husband and I are not super wealthy. We didn't win the lottery or get an inheritance, however I think if we can qualify for a home loan (virtually no credit due to age, etc) then buying a home within our current price point will be fantastic for us financially!

The first step anyone should make when considering buying a home is looking at YOUR budget. How much can you afford to spend a month on a house payment (including PMI, insurance, maintenance)? Assuming we can qualify for a loan using alternative credit, them checking our payment history for water, utility, and rent since we own our vehicles and only have one credit card, we will qualify for a larger mortgage then I would want. Just because the bank will loan you so much doesn't mean you should look for a house at your max loan! You don't want to be house poor (meaning you have no money for fun things like vacations because it all goes into the house).

My Rule for me and my husband is this: I want my mortgage payment to be LESS than what we currently pay for rent. I plan on putting the difference in the mortgage payment and our current rent payment either into remodeling the house or into paying off the loan faster! We aren't house poor currently so we would still have extra money for incidentals or to put towards the house in addition to what we currently pay for rent but it would be 100% optional!

To me the second step once you have a budget is to sit down with your partner (assuming your not buying the house on your own) and come up with a list of must haves and wants for your future house! Bedrooms, Bathrooms, yard size, garage, location, move in ready, hardwood floors, etc. I have to say the more I look at houses the more I realize just how much you do need to compromise! Be prepared to change your list of "must haves".

Originally when we started discussing homes we wanted at least 3 bedroom, 2 baths, over 1,500 sq ft, 2 story, curb appeal, hardwood floors and a big fenced yard or acreage. He also wanted move in ready while I was all for a fixer upper. Having spent ALOT of time researching all the houses near the area we plan to buy in I realize we might be compromising on the bathrooms and the yard!

The third step in the house buying process in my opinion is doing your research. In today's world you can view many houses online using the mls listing service through re-max, crye-lieke and so many other sites. Real estate agents are still important, however your able to narrow down houses without going to see them in person! Your also able to see what you can get within your budget! This allows you to be realistic in what you are asking for... to many people don't realize the constraints of their budget versus their must have or wish list.

Step Three is as far as we have gone at this point, due to the fact we probably won't be buying for another year or year and a half.

Fourth step is getting pre-approval. Some real estate agents won't even work with you without this, and you can't blame them. Real estate agents only get paid commission so showing people who can't obtain a loan or are just long term lookers houses is like working for free, they are losing money on gas and time.

Step Five: View the houses in person, and rank them and write comments as soon as you leave the property or while you are there. You want to put your thoughts on the house down while they are fresh since you will probably view multiple houses. List any problems or complaints e.g. small bedrooms.

Step Six: Make an offer. I always recommend offering about 10% less than the listing price unless your in a competitive market. You want the best deal possible for your money.

Step Seven: Home inspection! The offer should be CONTINGENT upon the home inspection! The home inspection is very important. You don't want to go cheap on this step and find structural problems that will cost you thousands of dollars down the road! Get referrals and find a good home inspector!

Anything you all think I have left out? Let me know in comments!