Rules for purchasing a home without buying trouble
Home buying should be a pleasant experience. There's no reason it won't be if you know how to avoid the possible pitfalls. Following just a few simple rules will make the process painless and even enjoyable.
- Shop for home financing first. Many home buyers begin by looking at homes they can't afford, thus w
asting the time of real estate agents and home sellers. A better approach is first to talk to several mortgage lenders to learn the maximum mortgage for which you can qualify. Inquire about both fixed rate and adjustable rate mortgages. Of course, after you have a home tied up on a purchase contract, you can shop further to see if the mortgage terms can be improved.
Mortgage lenders are especially eager to make loans today, because their business volume is down, but their vaults are bulging with mortgage money to loan. Home buyers should be aware mortgage lenders need borrowers as much as borrowers need lenders. Don't be intimidated. If a mortgage company isn't responsive and cooperative, there are dozens of other lenders who are.
- Become the neighborhood expert. Before making an offer to buy a home, inspect as many houses as possible in the neighborhood. Weekend open houses are an excellent time to inspect many homes in a short time period. After you inspect about 20 houses you will know more about an area's homes than do most real estate agents.
This understanding is critical to a successful home purchase. Home buyers should be careful what they tell the salesperson, because that agent legally represents the home seller and is obligated to tell the seller every material fact known about the buyer.
- Before making an offer bid, ask for a competitive market analysis. Just to be certain you are not overpaying for a home. Before making a purchase offer bid, be sure to ask the realty agent for a written competitive market analysis. This form shows recent sales prices of similar nearby comparable homes, as well as asking prices of neighborhood homes currently for sale. By adding and subtracting market value for the pros and cons of the home you want to buy, you can make an offer that is neither too high nor too low.
- Insist on mortgage and inspection contingency clauses. There are two contingency clauses your home purchase offer bid should contain to protect against unexpected but often encountered problems.
The first is the mortgage contingency clause. No matter how certain you are of obtaining a home loan, be sure to include a simple finance contingency. Such a clause might read: "This purchase offer is contingent upon property and buyer qualifying for a first mortgage of at least $80,000 at a fixed interest rate not exceeding 10.5 percent for at least 30 years with a 2 point maximum loan fee and a maximum $731.79 monthly payment." If the specified loan cannot be obtained, then you need not proceed and your good faith deposit must be refunded.
In addition to a termite inspection, if customary in your area, the other important contingency clause to consider involves a physical inspection. Such a clause might read: "This purchase offer contingent upon buyer obtaining at his expense within 10 days a satisfactory professional inspection report on the property; buyer to notify the seller if such report is unsatisfactory and this sale shall then be cancelled with the buyer's earnest money deposit promptly refunded."
Home buying can be an enjoyable experience for buyers who understand the process. By knowing what price home you can afford, inspecting many neighborhood homes before making a purchase offer, understanding who the agent represents, insisting upon a competitive market analysis before making a purchase offer and including finance and inspection contingencies, home buying will be a pleasurable purchase of your best investment.
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