Now is a great time to consider buying a house, despite the collapse of the housing bubble. Consider these facts: there is an abundance of homes on the market, real estate loans are available for buyers with good credit, interest rates are low, house prices have tumbled over recent months, and house sales are beginning to rebound in many real estate markets. If you are thinking about securing your financial future by investing in a new, or perhaps a foreclosed home, you should find the following seven most important considerations when buying a house helpful.
1. Where can you find a real estate agent you can trust? The answer to this question is not so difficult. Real estate agents and brokers stake their success on how well they serve the needs of home buyers and sellers. They are licensed and highly trained professionals that understand the real estate market and marketing, demographic trends, financial opportunities, and are there to help you find your dream home. You should begin to consult with them early in the home buying process.
2. What should you be looking for in a house and a neighborhood? The perfect new home demands in investment in quality, which always comes at a price. Once you have determined how much home you can afford, you can begin to look for homes that not only fit your needs, but also secure the quality of life and style that you are accustomed to. Naturally, not everyone can afford to live in exquisite comfort, so there are likely to be a few tradeoffs in the selection process. For instance, you will have to consider the value of having enough room to grow your family against the importance of having a yard, fences, security and privacy. Another consideration might be the condition of your home and how socially comfortable your home is likely to be. Does the homes neighborhood fit your ideals about community values, schools, religion and politics? You might want to walk through the neighborhood to develop a sense of how your individual lifestyle will fit, or not fit, with that of your neighbors.
3. Where can you save money when buying a house? Unless you're independently wealthy, you will want to consider how to save money when buying your home. You can begin by selecting a lender that offers the best mortgage package you can live with. Mortgage lenders have tightened credit requirements and are being more cautious about whom they lend their money to. While you may want to buy the most expensive and attractive home you can afford, it is possible that you mortgage lender will consider such a home a higher risk, in terms of resale potential, than another home with less bling. That's not to say that you shouldn't go for it, but you should be sure to check out the lender's closing costs and interest rates. Remember that a home's bling doesn't mean a thing if you can't make the payments and you're eating cereal three times a day.
4. How much money will you need for a down payment and can you really afford to own a home? The general rule for making a down payment is 20% of the purchase price. The mortgage lender may tinker with this a bit, depending upon your credit rating. Lenders are going to be concerned about your ability to repay your loan over its term. While you would make the smallest down payment possible, you should bear in mind that the down payment figures into the amount of money being financed and therefore affects your monthly payment amount, which includes the amount of interest you will be paying out for years.
5. What is the true value of the home you want to buy, is it a good investment or a money pit? The true value, or market value, of a home is an indication of the health of the real estate market in your home's area. In general, the market value is a complicated mixture of the number of existing homes on the market, the number of new homes versus existing homes, the number of homes under construction, the health of the economy, employment and population trends, and, of course, recent selling prices. There are other factors, such as construction costs, that also figure into the market value. The housing bubble, which is the effect of overselling homes in limited market areas, has driven the market value of millions of homes upwards over the past few years. As a result of the collapse of the bubble, real home market values have fallen while saddled with speculative and financially burdensome mortgages.
6. You think you've found your dream home, but what secrets does it have that the seller is hiding from you? You might fall in love with a home at first sight, but it may have a flawed history behind it. Unless you look carefully into the home's construction, maintenance and overall condition, you may find yourself paying for a nightmare instead of a dream home. Sellers are both unlikely and unwilling to disclose any flaws in their home, either before or after the sale. You should consider hiring a licensed housing inspector to go through the home and the property in order to uncover any hidden defects. A good idea is to accompany the inspector to the home and ask for a detailed explanation. It would be wise to ask a lot of questions and get some idea about the cost of repairs in terms of material and labor. You should always be on the lookout for building code violations and be wary of agents that try to distract you by diverting your attention to meaningless features that amount to nothing more than expensive bling.
7. Is this the right time to buy, or should you continue to save money by renting an apartment or house? The answer to this question depends largely upon your financial situation and your degree of comfort in making a huge financial commitment. In today's real estate market, buying a new house means taking a risk in a collapsed housing market, something we haven't experienced for decades. Renters have the option of continuing to rent and save money for some future day when the market has stabilized, meaning that they will be able to sell their home in the future and realize a capital gain. Those of us that are seriously in the market, for whatever reason, however, have considered the risk, balanced it against the necessity of buying, and determined that buying is still the only option. If you're seriously considering buying a home, you've already reached this conclusion and are prepared to make what is likely to be the most significant financial commitment of your lifetime.
Obviously, there isn't any single most important consideration when buying a house. The seven tips presented in this article are only the first of many considerations, all of which are valid. As you work your way through the home buyer's decision making process, be sure to consult with real estate professionals, mortgage lenders and financial advisors early on. They will be glad to answer your questions about buying a house, obtaining a loan, and any other factors you should consider.