05.21.15 by Jeff Johnson
Think you’re ready to start your home ownership journey? Be sure to get all your ducks in a row first. Purchasing real estate can be a complex process, and it’s essential for people who want to make a smart decision to buy the right property that suits their long-term needs. To prepare yourself for this life-changing event, be sure you take the following steps before starting the process.
Plan to live there a long time
In addition to the cost of the home, real estate purchases and sales have some of the most expensive transaction fees. As a buyer you are likely to incur loan & escrow fees, adding to the overall cost. As a seller, there are transaction fees, which will reduce the money you make. It’s a good idea to own a home for at least seven years — if not 10 or more. Otherwise you may end up paying fees that are higher than your profit, incurring a loss. If you don’t think you’ll stay in the property for a long time, keep looking until you find a property that you can call home, or keep renting until you decide you’re ready for a commitment.
Get your financing in order
About six to 12 months before you start the purchasing process, check your credit report, which is available for free at freecreditreport.org. This will give you time to clean any potential credit issues, possibly improving your interest rate or loan amount. Check an affordability calculator so you can have a general idea how much you can spend. Knowing your budget will help you choose which desired features you can afford. Avoid risky financial behaviors until the purchase of your home is complete. You’ll want to be sure you don’t make any large credit purchases, or transfer savings around between accounts. In addition, it’s essential to keep a consistent full-time work schedule, and make on-time payments for any loans, bills, or rent. Even after approval of a loan, lenders do a re-evaluation of credit before the sale is final and any financial change could cause a delay or withdrawal of the loan.
Find an agent
Ask friends and family, and do some online research to find a few real estate agents who know your area well and have good references. Talk to several to find one you think you’d be comfortable working with. Always choose an agent local to the area you are searching in, as they’ll have an intimate knowledge of the current market conditions and neighborhoods, helping you make the best decision. Of course the agent you choose should be backed by an experienced and well-regarded broker and be a full-time sales professional.
Take your time
You should study the areas you are considering and take your time purchasing property. Buying real estate will most likely be the largest purchase of your life. Once you close escrow, there is no backing out and unplanned selling could incur significant expenses.
There are no “incredible deals” in real estate. If it’s too good to be true, it probably is. With the exposure that the Internet provides, under-priced homes are quickly found and bid up to market price.
Buying a home is a much more complicated process than most people know, and also significantly more involved than it was just 10 to 20 years ago. Educate yourself as much as possible and plan the process well so you end up with a home you love and will keep for a long time. Doing the proper research and homework, plus making smart, deliberate decisions, is key to your real estate ownership success.
—Inspiration: Zillow Blog