The following is a guest post by Sid Davis, author of A Survival Guide for Buying a Home (AMACOM 2009), on what to look for when browsing for a new home.
There is a lot of pressure on not just first-time buyers, but every home buyer when seeking a new place to live. Here are some questions to ask your self as you go through the process.
How can I find lenders? Talking to friends, co-workers and Realtors, then narrow your list down to three lenders and give them a call.
What’s my income to debt ratio? The lenders can run this and tell you what maximum payment your income will qualify you for. You should get about the same loan amount from all three lenders.
What is the maximum loan amount I want to go? This doesn’t always mean the maximum the bank will loan you, but what monthly payments you feel comfortable with.
How much will this loan actually cost me? Have all three lenders give you a “Good Faith Estimate.” This is a form that breaks down all the costs associated with getting the loan. The lender quoting the lowest interest rate may not be the best deal. Only by comparing the Good Faith Estimates can you tell you which loan is the best deal.
What should I look for in finding a home? (1) Area is the most important consideration because eventually you’ll want to sell, and better the area, better your home’s value will grow. A small home in a good area is a better buy than a bigger house in a less desirable area. (2) Schools that have a good reputation tend to help home values go up. (3) Don’t buy a home that’s over-improved or costs more than the neighborhood average. The current owners will likely lose money on the sale and you don’t want the same problems when you sell.
How do I know the house doesn’t have problems? Never buy a home without having a professional home inspector look it over. They give the home a thorough inspection from basement to roof and if there are problems, they’ll find it. Also, make your purchase offer subject to a professional home inspection. If there are problems, you can negotiate repairs, money concessions, or walk away with your deposit.
I hope this helps you with some of you initial questions. For more information, check out A Survival Guide for Buying a Home (AMACOM 2009) and good luck in your new home!
Sid Davis, owner of Sid Davis & Associates, has over 25 years of experience as a real estate broker. He is the author of several books including Home Makeovers That Sell and The First-Time Homeowner’s Survival Guide, as well as countless articles for national publications. He lives in Farmington, UT.
Stay tuned for a guest post from mortgage expert David Reed tomorrow!