The Do’s and Don’ts of Buying a Home
One of the biggest decisions you’ll ever make is buying a home, so of course you want it to go well. For most Americans, getting a home is a huge accomplishment—only 65.4% of Americans are homeowners. The process of purchasing a home can get bumpy as multiple people and a lot of pieces have to come together before the entire process is done. For most people, the whole thing is an experience of learning as you go. However, you don’t have to fall into the same pitfalls as others on the buying journey.
To increase your odds in this competitive market, we’ve come up with a list of dos and don’ts to help a first-time home buyer. Let’s dive into our list.
Dos When Buying a Home
Do the proper research
You won’t be able to locate the perfect property until you figure out what you want. When you’re getting ready to buy a home, the first step is to determine what you’re looking for. You’ll have to decide which features matter most to you, being aware that each house is unique. What may be beneficial to one house in a certain area could lower the worth of a similar house in another location.
It is imperative to take some time to consider what elements and characteristics you would like to see in your new residence. Is a condominium an option? How essential is it to be in a desirable neighborhood? Do you need the latest amenities? Answering these questions will give you an idea of what you are searching for. Knowing your requirements for a home will point you in the right direction.
Once you have jotted down all of the criteria you have in mind, separate them into two columns: one for all the items you desire and the other for all the items you require. It is important to be honest with yourself during this process and not to trick yourself into believing something is necessary when it is actually a luxury. The more honest you are when creating this list, the more useful it will be in making a successful deal. So instead of wanting a Jacuzzi tub, you may need a two-car garage.
Once you have a greater understanding of your property needs, you can begin your search. Use the Internet to your benefit and take this opportunity to investigate the real estate market: pinpoint neighborhoods you find attractive, view the homes that meet your criteria, analyze the potential of an area, study trends, and decide where you want to get involved. Examine everything thoroughly when you are doing your research. Contact real estate agents in the area. Their insight may be priceless when investing in an unfamiliar area. Do not buy a home until you feel comfortable with the process.
Determine your budget
Before you start looking for a home, it’s essential to know how much you can afford to spend. This will help you narrow down your options and avoid overspending. You should consider all of your expenses, including your mortgage payment, property taxes, insurance, and any repairs or upgrades that may be needed. Team up with a knowledgeable physician mortgage lender to help you get this framework started.
Know your credit score
It is key to consistently check your credit scores from Transunion, Experian, and Equifax. It is also essential to stay up-to-date on your FICO score, as this is the score most lenders use when making decisions. If your bank offers it, you can often get your FICO score for free; if not, you may have to pay a fee for this service.
Prior to applying for a mortgage, it’s beneficial to understand where your credit currently stands. This way, you can develop a strategy to address any possible issues and be better prepared. For example, purposefully reducing debt or challenging any mistakes on your credit report.
Your mortgage lender will review your credit score and inspect your credit history. Factors such as existing credit card balances, missed payments, length of credit history, and any collections accounts will be taken into consideration. You may need to explain any delinquent accounts and hard inquiries to your lender. Typically, individuals with a higher credit rating are more likely to be accepted for a home loan and to receive a lower interest rate.
It is also essential to take care of any legal troubles before applying for a loan. Your lender may demand that you are not behind on child support payments, you don’t owe overdue income taxes, and you’re not part of a lawsuit or legal dispute. If you are engaged in any court proceedings, you must disclose this to your lender, who will also want an explanation.
When considering a mortgage, creditors will likely ask if you have ever declared bankruptcy or if you’ve ever owned a house that went into foreclosure. While these events may not necessarily make it impossible to buy a home, a time limit may be imposed between the occurrence of the event and the moment you can get a mortgage.
Save for a down payment
Although not necessary for a physician mortgage, Darick Hensel, a physician mortgage specialist, always tells his clients “cash creates options.” Having a down payment saved up can help you secure a better mortgage rate and lower payment, but don’t let that prevent you from considering purchasing a home. Consider the advantage you have access to with a physician mortgage and the zero-down options.
Shop around for the best physician mortgage rates
When you’re ready to get pre-approved for a physician mortgage, it’s important to shop around for the best rate. The secret is to consider and apply with more than one physician mortgage when getting pre-approved. Just because one physician mortgage lender has the best rate today, doesn’t mean they will be the best physician mortgage rate when you go under contract on a home.
Consider all costs associated with closing costs, property taxes, and any repairs or upgrades that may be needed. It’s important to factor in these costs when determining your budget. This is also a great advantage you have with a physician mortgage. You can spend less on the large down payment and keep it for improvements and closing costs.
Get a home inspection
Before closing on a home, it’s important to have a home inspection to check for any potential issues. A home inspector will provide you with a report of their findings, which will help you make an informed decision about the home. Physician home purchases tend to be higher-end homes, But this doesn’t mean they won’t have problems.
The inspection is not limited to but should include roofing, plumbing, HVAC systems, structural damage, pest control, drainage, grading, surrounding land, and retaining walls. A good inspector will not only reveal the issues the house has but also point out issues that may crop up in the future. The report will also help you make more accurate repair estimates.
Shop around for homeowners insurance
For those purchasing a home, it is necessary to have homeowners insurance if you are taking out a mortgage, but even if you buy the property in cash, it is still highly recommended. It is possible to save money in the long term by researching different companies and comparing their rates.
When assessing policies, it is important to consider any potential risks which may be exclusive to where you live, such as flooding, wildfires, earthquakes, or tornadoes. Also, you may be eligible for discounts if you combine multiple policies, have a security system installed, or if the property you are purchasing has a recently installed roof.
Don’ts When Buying a Home
Overstretch your budget
It’s easy to get caught up in the excitement of buying a home and overstretch your budget. This can lead to financial problems in the future and make it difficult to make your mortgage payments. Be sure to stick to your budget and only buy a home that you can comfortably afford. It’s also important not to get too emotionally attached to your investment. This will ensure you remain flexible in considering other options and avoid buyer’s remorse.
Neglect to factor in all costs
When buying a home, it’s important to consider all costs associated with the purchase. Failing to do so can lead to unexpected expenses and financial strain. Homebuyers should anticipate investing between 2% and 5% of the purchase cost on closing costs. Looking for a mortgage lender and title company that offers lower rates might help you save money, but it is wise to keep extra savings around for these costs.
What could be better than finding out that you haven’t spent as much as you expected? Plan ahead to prevent any last-minute panic over a lack of funds.
Rush
For investors, the prospect of buying a home can be very different depending on their experience level. Those who are familiar with the process may view it as a routine procedure, while a first-time home buyer may be daunted by it. The magnitude of the purchase can add to any impulsive decisions they might make, and they may find themselves rushing to the closing table, feeling overwhelmed.
Taking the time to do your homework before making any big purchase is essential. Skipping the research process can have devastating consequences. If you are not careful, you can easily overlook important details that require your attention. Having knowledge of the real estate market is essential for exercising patience. Experienced investors recognize that homes come and go like the sun rises and sets. It is better to wait and pass on a home than to rush into a deal that is not well thought out. Unless it is a custom house, it is likely that you will find a similar property in the future.
In contrast, moving on too quickly is also not recommended. Many home buyers make the mistake of leaving a deal too quickly. Though some residences may seem unattractive or not meet certain requirements, they might also have other advantages which are not as easily seen. Analyze each house as an entire purchase, since each has its own set of pros and cons. With a basic and reasonable fix, that unappealing house you just passed on could become your ideal home.
Skip the home inspection
A home inspection is crucial in ensuring that you know what you’re getting into when buying a home. Skipping the home inspection can lead to unexpected issues with the home that can cost you a lot of money in the long run. When you receive the inspection report, you may find it helpful to engage in negotiations with the seller in certain scenarios. When doing so, bear in mind prioritizing any major issues (like health and safety) instead of concentrating on cosmetic matters.
If you are in the process of working with a real estate agent, the two of you can come to an agreement on the approach to take and how much negotiating needs to be done. It is typical to request a reduced sale price or for repairs to be done by a licensed expert prior to the closing. Additionally, there could be an arrangement made where the seller pays for some of the closing costs in exchange for keeping the sale price as-is.
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