Since we moved into our house back in June, we've had several friends approach us with questions about our house buying process. So I thought I would share a few of the tips we learned along the way!
1. Get pre-approved before you ever step foot into a potential house. It's very easy and painless to get pre-approved. Pre-approval does not mean loan approval, it means you have a price range to start your house hunt. You can get pre-approved by any bank or lender, it doesn't have to be from the bank or lender you're going to use.
2. Get a full-time realtor! I cannot stress this point enough! Believe me when I say, you want a full-time realtor! Even if your best friend in the whole wide world is a realtor and you want to use them as your realtor, if they're not full-time I would not recommend using them. I also strongly suggest using someone that has at least 2 years of experience in real estate. Our initial realtor was a friend of Nick's and was part-time and she was not dedicated at finding our first house.
3. Do NOT sign "exclusive rights to represent buyer" form. Realtors will try to make you sign this document even before they show you 1 property, but do not sign it! Wait to sign it seconds before you put in your first offer on a place. If you sign this document then you have to stick with that realtor and if you don't then you have to pay them money!
4. Ask the right questions. Don't be afraid to ask your realtor and lender thousands of questions. It's not everyday that you buy your first house so by all means take it seriously and ask every question you can think of! Here are some key questions to ask - what are the terms of my loan?, are there penalties for paying more on my loan from month-to-month?, can I change the term of my loan from 30 years to 15 years, years later?, do I have a transferable mortgage loan?, is it a fixed interest rate?, what are the terms to get out of contract with this property if I decide I no longer want to buy it?, what is earnest money?, and the list goes on and on!
5. Before you even meet with a realtor and after you have been pre-approved, I would highly suggest determining what price range you feel comfortable with. The lender will approve you for waaaay more than what you're comfortable with paying each month. We were approved for $100,000 more than what we ended up buying. It's very important to look at your budget and play around with #s to determine your price range. You also want to determine how much, if any, down payment are you going to put down. Here's a tip from our lender - for every thousand dollars you can account for $6 a month in mortgage costs. So for example, the difference in a $240,000 and a $230,000 house is $60 a month.
6. Once you decide you like a house, it's better than all the other ones you've seen, sleep on it and see the house for a second time, or third time before you put in an offer. I'm always amazed when I hear of people only seeing a house 1 time and before buying it. We saw our house 3 times before we put in an offer. It's also important to see the house at different times of the day. The same house might feel scary or weird at night but look and feel great during the day.
7. Research what future road construction plans are for the surrounding areas. Your realtor can help you find out that information. The first house we were under contract for had plans for 540 to go in at 1/4 a mile from our backyard. The last thing you want is to move in and then find out that a major highway is going in your backyard.
8. Make sure any updates or work that's been done on the house has been permitted and the permits are on file. Also, make sure all work done on the house has been paid. If a contractor has done the work and they have not been paid then you may want to consider walking away. The reason I say this is there could be a lean on the property and if your offer price does not cover the expenses then the contractor could come into your new home and rip out all the work he's done.
9. Put in your lowest offer first. Do not worry about offending the seller, if they are offended then you can always put in a second, higher offer. You can increase your offer but you can never go down in your offer so keep that in mind. You can also change the amount of closing costs your asking for and not go up on your offer price. Before putting in an offer ask your realtor to pull up comps in the area, this will help you determine if the asking price is way too high or just right.
10. Always have an inspection done on the house and be there when the inspection is taking place. Inspections can point out possible repairs or problems with the house. Inspections also allow you to learn about the house you're buying. Our inspector pointed out that we may want to consider putting locks on the crawl spaces for when kids come along. We never would have thought of that. Our inspector also pointed out the main cut off switches for our house.
11. Once you have the inspection report, review it, ask questions if you don't understand something, and negotiate with the sellers to fix all or some of the problems in the report. We asked the sellers of our house to fix 3 out of 5 things that the inspector pointed out. They were easy, very inexpensive repairs, but it saved us the time, trouble, and money to not have to fix it after we moved in.
12. This one may seem like common sense, but make your list of "must haves" and "would be nice but not deal breakers" lists prior to meeting with your realtor. These lists will really help your realtor find potential houses for you to look at.
There are lots of other tips I could share with you, but these are the main tips I think are important when buying a house.
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