10 tips for buying a home

[Adam in CO]

1. Don't buy if you can't stay put.
If you can't commit to remaining in one place for at least a few years, then owning is probably not for you, at least not yet. With the transaction costs of buying and selling a home, you may end up losing money if you sell any sooner.
2. Start by shoring up your credit.
Since you most likely will need to get a mortgage to buy a house, you must make sure your credit history is as clean as possible. A few months before you start house hunting, get copies of your credit report. Make sure the facts are correct, and fix any problems you discover. Ask me about companies that can remove erronious and old items from your credit, and really boost your score. I have seen clients get 100 points out of their score for less than $100 in a month's time!
3. Aim for a home you can really afford.
The rule of thumb is that you can buy housing that runs about two-and-one-half times your annual salary. But you'll do better to use one of many calculators available online to get a better handle on how your income, debts, and expenses affect what you can afford. Watch out for interest only and pay-option scenarios. They are great packages, but not for everyone.
4. Don't worry if you can't put down the usual 20 percent.
There are a variety of public and private lenders who, if you qualify, offer low-interest mortgages that require a down payment as small as 3 percent of the purchase price. In fact, 9 out of 10 residential mortgages we do these days require NO down payment and NO closing costs!
5. Buy in a district with good schools.
In most areas, this advice applies even if you don't have school-age children. Reason: When it comes time to sell, you'll learn that strong school districts are a top priority for many home buyers, thus helping to boost property values.
6. Get professional help.
Even though the Internet gives buyers unprecedented access to home listings, it's still a good idea to use an agent. Look for an exclusive buyer agent, if possible, who will have your interests at heart and can help you with strategies during the bidding process. The seller pays ALL real estate commissions, so it's always a good idea to have your own representation as a buyer.
7. Choose carefully between points and rate.
When picking a mortgage, you usually have the option of paying additional points -- a portion of the interest that you pay at closing -- in exchange for a lower interest rate. If you stay in the house for a long time -- say five to seven years or more -- it's usually a better deal to take the points. The lower interest rate will save you more in the long run.
8. Before house hunting, get pre-approved.
Getting pre-approved will you save yourself the grief of looking at houses you can't afford and put you in a better position to make a serious offer when you do find the right house. Not to be confused with pre-qualification, which is based on a cursory review of your finances, pre-approval from a lender is based on your actual income, debt and credit history. The pre-approval process is quick and easy. It can usually be done that day with very limited information.
9. Do your homework before bidding.
Your opening bid should be based on the sales trend of similar homes in the neighborhood. So before making it, consider sales of similar homes in the last three months. If homes have recently sold at 5 percent less than the asking price, you should make a bid that's about eight to 10 percent lower than what the seller is asking.
10. Hire a home inspector.
Sure, your lender will require a home appraisal anyway. But that's just the bank's way of determining whether the house is worth the price you've agreed to pay. Separately, you should hire your own home inspector, preferably an engineer with experience in doing home surveys in the area where you are buying. His or her job will be to point out potential problems that could require costly repairs down the road. Our last acquisition included a home inspection that uncovered almost $30,000 in necessary "health and safety" repairs. The seller agreed to fix it all, but we would have missed much of it without the inspection.

[ShaggyX]

I think I am 1 for 10. Damn mortgage guy never should have talked me into it.

2.5 times your annual income? HAHAHA!!! Try 4+ times....and I can still make it work.

[evldave]

Just signed the martgage papers yesterday, close in 2 weeks. 4.13x my annual salary (credit score of 836 will get that for you). 1.2 acres, 125' of riverfront, custom built home (my design), 30x60 2-story shop, 35 minutes from work. WOOHOO!!

[HummBebe]

SWEET!! When's the Barbeque???

[Orbital H2]

I guess I failed on most of the items, except, I like where I live and it is in a great neighborhoos with excellent schools.
been in the new house for 2 months at 6X my salary and still making it work

[NewHummerGuy]

Following the 2.5 x's you salary seems far fetched. I am not sure (unless you are making 250k a year) that you could afford much house going by this rule of thumb. The others make sense. Just this one seems impossible.

[HummerNewbie]

Speaking of how many times your salary, thought this was interesting from last week.

How prices in 317 metro areas stack up

[KenP]

Thanks alot, Newbie....

Virginia Beach-Norfolk, VA-NC

$220,000
27.5%

That sucks.

[evldave]

Originally Posted by HummBebe

SWEET!! When's the Barbeque???

First nice weekend next spring. It takes 2 months just for permitting and another 6 months to build, so I'll shoot for April-ish, after the shop is built and the outdoor kitchen w/kegerator is installed

[evldave]

Portland, OR-WA

$268,500
41.1%

I WISH!!

[NewHummerGuy]

Washington, DC-VA-MD-WV

$401,100
38.3%

OUCH

[HummerNewbie]

Originally Posted by KenP

Thanks alot, Newbie....
That sucks.

Sorry, but we aren't any better off down here. What really sucks is the average FL house is really small too


Orlando, FL

$208,500

40.2%

[HummerNewbie]

I'm just glad I'm not moving South

Naples, FL

$383,000
102.6%

[Orbital H2]

Originally Posted by HummerNewbie

Sorry, but we aren't any better off down here. What really sucks is the average FL house is really small too



Orlando, FL

$208,500

40.2%

Trailer in a trailer park go for double that around here

[Geraldo]

I can live anywhere I want.

[HummerNewbie]

Originally Posted by Orbital H2

Trailer in a trailer park go for double that around here

Whatever

Anyway, not talking about the $208K average, which is low for this area of town by a loooong shot, talking about the 40.2%.

Not sure about all the figures but I know the $208K was the Orlando average 9-12 months ago and was closer to $250K this spring. As far as I have seen, prices are not coming down so all of the figures on the list could be old.

[hmrlvr]

I'd say #10 is the most important. The rest don't matter to me but # 10 keeps me in buisness

[Boss Hoss]

Adam id be interested in knowing who you have do your "credit repair". Even though the demographic in which i cater to doenst need this too often, the price is right. The guy i have been referring business charges around 750-1000 so $100 sounds like a good deal...at this price I would bet that i wouldnt had to spend my time doing it for two clients this month.

[MovinH2]

Great tips.

[KenP]

Thanks Adam.