When it comes to home ownership both hubby and I are no strangers. Real Estate is our passion and if you have been following along then you know how much we love to renovate homes that need tender loving care, live in it for a while and then either sell or lease.
So when it comes to home shopping we have a few things up our sleeves that we always exercise. Of course, location is the most important thing when shopping for a home, and that usually comes with a price tag.
A lot of people (I was one of them!!!) expect to purchase their dream home on their first purchase. Yes, that can happen to some people but most often than not we can only afford what our wallet allows. My advice is to purchase a home that you can fix and turn that into your dream home. Remember, you can make a lot of changes on a home but you can never ever change its location!
If you can find the ugliest home in the best location then you hit the jackpot!
Whenever we shop for a new property we make sure the property meets our formula of livable, sellable, and rentable. This means at any given point in time this property should be able to sell it or rent it in a heart beat. It should also be desirable for us to live in. If we don’t want to live in it do you think our tenants would?
I personally think that another important factor in purchasing a home is to make sure there’s a sense of community as well as places where you can be active, social, and entertained. We’ve been eyeing the houses for sale in Brisbane as part of our retirement planning.
If you are a first time homeowner, here are some tips that will help you get started:
- Affordability. Determine how much you can afford by using this calculator.
- Down Payment. Make sure you have at least 20% down payment plus another 1 – 1.5% of the purchase price for the closing cost. You also need to have this down payment in your bank for at least 3 months with bank statements showing the history. So, if you want to borrow money from mom & dad or friends make sure you do so 3 months in advance to avoid paperwork and questions during the loan process.
- Clean Up Your Credit Report. If you need a home loan make sure you have great credit. You can request a credit check for free once a year because trust me, surprises will always show up. You don’t want to have to clean them up during the loan process, which can prevent you from getting your home.
- Get Prequalified and Preapproved for Credit for Your Mortgage. With fluctuating mortgage rates, it is important to determine where you stand. You can find a mortgage broker online or through friends and family that have dealt with them in the past. Most brokers can determine how much you can qualify for based on your income and the amount of savings and investments you have. They will then run your credit to see how much they can lend you.
- Locate a Realtor. You can then take that preapproved letter and locate a realtor to help you find a home. You can also look at homes on your own (we do this all the time) online and get a sense of what kind of home you can afford. The realtor’s job is to negotiate the best price for you and make sure all the required transactions go smoothly during the escrow process.
- Make an Offer. Once you have identified a home, you can make an offer. Your realtor can write up that offer and help you present it. Don’t be shy to low ball the amount but also be willing to walk away if the seller is offended or not accepting your offer. Your realtor by law has to put in an offer based on what you want to buy it for regardless of the offer price.
- Contingencies. There are usually 2 contigencies once an offer is accepted by both parties; home inspection and loan. This is where you can pull out of the deal and get your deposit back. The home inspection process is also an opportunity to negotiate any repair fees. Once the home inspection process is lifted the loan contingency is in effect. An appraisal of the home will be ordered. If the home is appraised at a lower value than your loan amount then you will have to pay the difference. Or, you can have the seller lower the purchase price. The important thing is not to lift this contingency until your lender said it’s a done deal. Also, during this time don’t go on splurging for that new sofa or tv because once the loan docs have been signed your lender will run another credit check before filing the the loan docs with the assessor’s office. This takes 2 to 3 days.
- Close the deal. This is the best part! Once everything is in place you get the keys to your house!!!
Home ownership isn’t as scary as people think. If you want to be a homeowner in a year or two it is achievable. It’s never too late to start cleaning your credit if needed and start saving that 20% down payment. Time flies and next thing you know you will never have to pay any rent increase.
