- Get pre-approved, not just pre-qualified. Anyone can be pre-qualified, but that doesn’t guarantee you’ll get approved. Pre-approved lets you know exactly how much you can afford to buy based upon how much the lender is going to give you. Many people make the mistake that just because they can afford to make an $1800 house payment because that is what their rent was, that they will get approved for that $500,000 home loan but that is not always the case. Your taxes, income to debt ratio and other factors might dictate your lender approves to give much less. In the long run this is good because its always better to live under budget than struggle each month to make your mortgage payment along with there rest of life’s expenses.
2. Bigger isn’t always better. The Jones’ might actually be deceiving you, living in their big home, giving the illusion they can blissfully spend whatever they want on their fancy lifestyle. The reality is they might be mortgaged to the hilt and living off of credit cards. You can enjoy a luxury life style in a smaller home by purchasing well within your means and fixing up your home to include all the little luxuries that make your home your castle. Fancy showers, bath tubs and cabinets, fancy floor coverings and even landscaping can turn any size home and yard into the paradise you will love coming home to!
3. Budget for sleeper costs. I’m not talking about new sleeper sofas for house guests. Sleeper costs are those extra costs such as property taxes, HOA dues, utilities and landscaping. And don’t forget to set aside for when the water heater breaks or the AC needs to be replaced. Just because your mortgage broker says he or she has approved you for a $750,000 home, doesn’t mean that’s what you have to buy. Stay within budget to make sure you have funds for the extra costs. Setting aside money on a monthly basis for things such as windows, Heating and AC and other “surprises” that homes are known to burst upon you will make your home buying and home owning experience really pleasant and less financially stressful.
4. Separate head from heart when it comes to the final decision. Many home buyers fall in love with certain aspects of a home. They might like a room color or the way the backyard is landscaped. Buying emotionally doesn’t guarantee you’re making the best financial decision. A scruffy back yard can always be landscaped into an island oasis and ugly green wallpaper can be stripped back and replaced with gorgeous canary yellow paint, a few accents and some crown molding. Look for solid construction and as good return on your investment as possible, such as is the home in a good school system? What county is it in and what are the taxes? What condition is the home in and what are the most current replacement dates of things like the roof and the Heating and AC?
5. Stalk your potential neighbors. Visit your new neighborhood as often as possible during different days and times. Do you notice wild parties and barking dogs? Are there unsightly cars and trucks being worked on in the streets? Observe families and the presence of children riding bikes and playing outside. Happy children having fun outside is a good sign of a safe and family friendly neighborhood if that’s what you’re looking for.
6. Give your potential new home a check up. Spending $200 on a home inspector will either uncover hidden costs that could save you thousands or, you will have paid the money in exchange for peace of mind that your home has a clean bill of health. A home inspector’s job is kind of like a doctor giving a check up to see if everything is OK. A home inspector is providing an unbiased third party opinion so you can factor in the home’s health and make a good decision to buy or not and also how to negotiate price based upon the home’s check up results.
7. Know your boundaries. Know exactly if the fence or that huge tree is on your property or your neighbor’s. Know what part of the lawn is your responsibility to care for and what trees and shrubs you need to be responsible for. Don’t encroach upon your neighbor’s side of the fence if your flowering vine is dangling over into their property. Also be aware of any far reaching limbs that are dangling over your patio but really belong to the tree in your neighbor’s yard. Also property taxes are based upon what you own so a map is a good clarification of what you’re being taxed for.