How Much Can You Afford?
Early in the home buying process, you’ll want to get pre-qualified for a mortgage loan. It enables you to move swiftly when you find the right home, especially when there are other interested buyers. It also indicates to the seller that you are serious and can afford to buy the property. A pre-approval is a simple calculation done by a mortgage lender that tells you the amount you’ll be able to finance through a loan and what your monthly payment will be. It will also determine what loan program you best fit into and what if any requirements there will be for the property you select.
The price you can afford to pay for a home will depend on several factors, such as:
- Gross income
- The funds you have available for the down payment, closing costs and cash reserves required by the lender
- Your debt
- Your credit history
- The type of mortgage you select
- Current interest rates
Another figure that lenders use to evaluate how much you can afford is the housing expense-to-income ratio. It is determined by calculating your projected monthly housing expense, which consists of the principal and interest payment, property tax payments and insurance premiums on your new home loan (also known as PITI).
Each buyer is unique, and a mortgage professional can help you find out just what you can afford. Talk with your CENTURY 21® agent to get a list of recommended mortgage professionals in your area.
Know Your Neighborhood
When you buy a home, you’re investing in a community. You’ll spend a significant amount of time and money supporting the schools, community organizations and commercial centers in the area. Before you make the final decision, take a good look at the location and make sure it fits your lifestyle. For example:
- Evaluate the property’s proximity to other important locations in your life. How long will your commute time be? Is there a hospital or doctor’s office nearby? What about schools, childcare, shopping, family and friends?
- Compare the neighborhood amenities for each area you are interested in and understand the costs associated with them.
- Make sure you feel comfortable in the area. Drive around the neighborhood at different times of the day and night on multiple days of the week to observe activity and noise levels. An educated buyer is a happy one!
CENTURY 21® real estate professionals are a tremendous resource. Ask your agent for a list of schools, shopping centers, parks or other amenities that are important to you. Buying a new home is about more than the structure and property. It’s about your new lifestyle as well.
TIP: Visit and understand the school district. Even if you don’t have children in the school system the district reputation can be a good indicator of value and a factor in future home sales.
Shopping For A Home
Buying a home is one of the most important decisions you will make. That’s why it’s in your best interest to choose a real estate agent who listens to and understands your needs, and has detailed knowledge of the area in which you want to want to live. When you choose a CENTURY 21® agent, you’re dealing with a professional who understands your concerns and will provide you with the personalized service that makes all the difference.
What should you expect in your first meeting with a real estate agent? A CENTURY 21® Agent will typically talk to you about the neighborhood where you want to live, home prices, features and amenities that you desire. They act as a consultant to help you assess your needs and wants to locate the best property for you and your family.
When you’re ready to visit houses, follow these guidelines:
- Take notes on each property you see so you can remember the details later.
- Be honest with your agent about what you like and don’t like so they can revise the search if necessary.
- When you tour a home that doesn’t work – scratch it off the list! It will make narrowing down the search easier.
TIP: After touring each home, write down what you liked and didn’t like. Your CENTURY 21® Agent can help you develop a rating system to narrow the field. For example, pick the house you like best on day one and compare all other houses to it. When you find a better one, use the new favorite as your standard.
Making An Offer
Once you’ve found your ideal house, it’s time to get started with the financial and contractual side of the purchase. Let your CENTURY 21® professional guide you through this process. Purchase contracts vary in length and terms from state to state, and sometimes within a state.
Multiple offers on the same home are not uncommon, so you may only get one chance to make an offer that the seller will consider. That’s why it’s important to think carefully about your strategy. There is more than just price under consideration when making an offer. The seller will also be considering terms such as financing method, repairs, date for possession and closing costs. There is no guarantee that the Seller will accept your initial offer and negotiations may take place. Your CENTURY 21® Agent will use their expertise to help you navigate the negotiation process.
If you have any personal interaction with the homeowner, avoid sharing any information about your move, your current housing status, financial status or your feelings about their property – positive or negative. This could work against you in future negotiations.
TIP: You and the seller have different goals, so it’s important to consult with your CENTURY 21® Agent. He or she can bring order to the process, and will know what questions to ask to help you reach a desirable outcome.
Importance of Inspections
Congratulations! Your offer was accepted and it’s time to proceed towards closing.
One of your first, and most important steps, is to hire a professional home inspector to avoid costly surprises after closing. This is a standard inspection that includes:
- Room-by-room review
- Exterior home components
- Electrical systems
- Foundation and structural components – both interior and exterior
- Heating/air conditioning systems
- Plumbing systems
- Attic/crawl spaces
A thorough home inspection covers everything from foundation to roof, and takes two to three hours depending on the size and age of the property. A written inspection report will be provided and will reflect the condition of all inspected items. A typical inspection can range from $300-$600 depending on size and attributes of the home.
Some common items a home inspection could uncover are:
- Maintenance problems such as rotting decks, plumbing leaks, water damaged ceilings, etc.
- Electrical problems (even faulty fuses can lead to bigger difficulties in the future)
- Drainage problems, which could include water intrusions below the home
- Roof leaks and defects from aging
- Poor ventilation, especially in an attic; this is the time to ensure that all vents are clean and working properly
- Excess air leakage due to poor weather stripping and subpar caulking around fixtures
- Failed window seals, which are routinely found with dual pane windows
- Air Conditioning and Heating unit failures
- Faulty lines in water heaters, overflow piping and/or hazardous flue conditions
In addition to a standard Home Inspection there may be additional inspections recommended based on the features of the property. Other inspections if applicable are:
- Wood Destroying Organism (Termites, wood decay etc.)
- Well and Septic Inspection
- Pool/Spa Equipment
- Wind Mitigation
6 to 8 weeks prior:
- Purchase or rent moving supplies: tape, markers, scissors, newspaper, blankets, moving pads, plastic storage bins, rope and a hand truck. Free boxes can usually be obtained at a local supermarket, but consider purchasing wardrobe boxes for clothes.
- Have a garage sale to clear out unwanted items and plan accordingly. Consider donating unwanted items.
- Keep a detailed record of all moving expenses. Your costs (and donations) may be tax deductible depending on the reasons for your move.
2 weeks prior:
- Hire a reputable mover or rent a moving truck. Be sure to get referrals or references (ask your CENTURY 21® Agent), get estimates and purchase moving insurance.
- Two weeks before moving day, contact your telephone, electric, gas, cable/satellite, refuse and water companies to set a specific date when service will be discontinued. Contact utilities companies in your new town about service start dates, including Internet and telephone services.
- Notify healthcare professionals (doctors, dentists, veterinarians) of your move and ask for referrals and record transfers.
- Register children for school and ask for school records to be transferred.
- Notify lawn service, cleaning and security companies when service should be terminated.
- Advise the post office, publications and correspondents of change of address and date of move.
- Check your homeowners’ insurance and make arrangements for new coverage.
- Have tools handy for breaking down beds and appliances.
- Give every room a final once over. Don’t forget to check yard, attic, garage and closets.
- Have the final payment for the movers and money for a tip.
- Don’t forget to check in with your CENTURY 21® Agent – he or she may be able to provide useful local advice and/or referrals.
TIP: Move valuables (jewelry, legal documents, family photos and collections) yourself – don’t send them with the moving company. Make sure you have a complete home inventory of all your possessions.