Buyers Real Estate 101
The Buying Process
There are two ways to prepare to buy a home: One is to search for a home on your own through print media or more likely the Internet. The other is to figure out what sort of home you can afford and then to start looking for houses in that price range.
Once you decide to bring the process of looking for a home, the next steps are straightforward:
- Get representation, which means finding a broker who is there for you 24/7!
- For the “Buyer,” it is free
- For the “Seller,” the fee is commission-based. (Most sellers gladly work with brokers, as we bring the most qualified buyers through the door.)
- You obtain a pre-approval letter sometime call a pre-qualification
- You and the seller sign a “contract to purchase”
- After signing the contract to purchase, you are given 10 days to perform a home inspection on the property. (At this time, if the inspection is not satisfactory, the buyer may choose to exercise their right “in most contracts” to “back out of the deal.”)
- You sign the Purchase and Sale agreement
- You apply for a loan to buy the house or condo
- • You receive legal title to the property at the “settlement” or “closing”
The chain of events described above is, by necessity, is a little over- simplified. All the more reason to get yourself a good broker! Remember, buyer representation is free…
Understanding Representation
Because you want to negotiate the terms, conditions and costs of home-buying to your advantage, it is important to ensure that your interests are represented. Hiring your own real estate broker – known as a buyer’s agent – is a smart move that doesn’t cost you anything. The seller pays all costs – and you have an expert in your corner who ensures that:
- Your needs are being meet
- You are not being “taken for a ride”
- All necessary paper work is filed and recorded
First, find an agent who represents you and not the seller. This is beneficial during the negotiation process. If you are working with a buyer's agent, it is our responsibility to look after your best interest. In addition, we are focused on getting you the lowest asking price.
Also, when you use a buyer's agent, you will see more properties. Not only are we plugged into their Multiple Listing Service, but we are also actively finding homes that are listed as FSBO, or homes that sellers are thinking about listing.
Getting Organized
When you buy a home, you make one of the most significant personal investments possible. Being organized about your finances, therefore, is extremely important.
Getting organized financially enables you to:
- Buy the best home possible with the least amount of stress possible!
The first step is to figure out what you can afford to pay for a home. An excellent way to figure out your home-buying ability is to get pre-approved, which is what happens when you apply for a mortgage. The mortgage-application process allows a potential lender to obtain your credit report and verify your employment and assets. Getting pre-approved tells you precisely the amount of your maximum loan.
The second step is to maximize your credit score. Bringing up your credit score by 30 points before closing, for instance, can save you $10,000 or more. Shaving off a quarter-point of interest on a 30-year fixed-rate mortgage for a $400,000 home may seem unimpressive at first – until you do the math.
If a strong credit rating allows you to cut down your mortgage payment by $50 a month over 360 months, you save $18,000. Paying $60 a month less over the same period of time is a $21,600 savings.
One way to bring up your credit is to pay off your credit-payment debts. Did you know that every $100 you shell out monthly for a credit payment costs you about $10,000 in a home-ownership loan? For instance, that $500 monthly car-payment for the Lexus you’ve been contemplating – it would look so good in front of your new house – could mean that you qualify for $50,000 less in a mortgage.
Which brings us to our final point. Never make a large purchase – even if you have the savings to do so – while in the process of buying a home. Whether you’ve been pre-approved or not, your credit WILL be checked again just before closing. If you play your “credit-maximizing” cards right, you’ll ensure that your new home isn’t a house of cards – in short, you’ll maximize your home-buying and owning assets!
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