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Buy The Right House. Buy The House The Right Way.

September 28th, 2006 at 05:43 am

Buying a house is one of the biggest moments in your financial lifetime. Doing it the correct way will save you thousands, and make you thousands (not to mention save time, and headache). If you think that all you have to do is find a house, make an offer, and move in you have it all wrong. Shopping for a mortgage, a real estate agent, and a house is just the beginning of the house buying process.

Personally, I did everything wrong. I didnít shop for a mortgage which turned out to be a HUGE mistake. I ended having to shop for a realtor because my first one was dreadful, and I mean horribly dreadful. This realtor made me drive my own car, didnít know where she was going, brought me to houses that were already sold (for more than a year), took me 15 miles out of the area where I wanted to buy, and knew nothing about the houses she was taking me to. I had to fire her, and get a new realtor. Having a really good realtor makes a huge difference in the home buying experience.

Here is a list of things to do before you start shopping for a house.

1. Get your FICO. Remember the article about why knowing your FICO can save you a ton of money. Well, this is one of the scenarios that involve finding your credit score. Before shopping for a mortgage you need to know what kind of rate and payment you are going to expect to get from lenders.
2. Find how much house you can buy. Like I said in an earlier post, do not buy a house that you really cannot afford. Having a house should be an investment, not a money pit. Use one of these mortgage calculators to estimate a payment that you can truly afford.
3. Now itís time to shop for a mortgage. Check Bankrate and LendingTree to receive some offers from a lot of lenders without all the work. Another thing, I highly recommend going to the bank your checking or savings account is held at and ask them for their offers. They will sometimes offer you a discount just because you already have business with them. Another great lender is INGDirect if you want low rates and minimal closing costs. For first time homebuyers getting an ARM or hybrid loan is the way to go. Most of the time people who buy their first house usually buy another in 5-7 years. Getting a 30 year fixed mortgage will make your monthly payment higher, and you will end up paying more in interest. First time homebuyers should also look at NACA and other programs (like FannieMae) for first time homebuyers.
4. Make some choices. Choose an area where you want to buy, and decide how much you are willing to spend before you go to a real estate agent. Some real estate agents will bring you all over town which will waste a lot of time.
5. Get a real estate agent. It makes life a lot easier if you have a good agent that has your best interest at heart. Shopping without one can be very time consuming, and they have access to software and websites that non-agents do not usually have. They are also free for the buyer because they usually get a commission paid by the seller. Not too shabby.
6. Take a week off work. This was one thing I wish I would have done when I was looking to buy a house. You need to dedicate yourself and your time looking for the house. Making offers, signing papers and receiving phone calls from your agent and mortgage company can be stressful and extremely important. So, if you can, take a week off work.
7. Find a house that you really like. This house does not have to be your dream house, but it canít be a dump that you regret buying. A lot of people end up settling and get a house that they truly donít love. This will create problems in the long run, so shop around. Itís a big investment so take your time, and do not let the agent pressure you into something you do not like. Itís your money not theirs.
8. Hire a pro. Once you find the house you really like hire a construction engineer or house inspector to go through the house before you buy. I recommend getting the engineer if you can find one. Go to a local university or ask around for one. They know what they are doing a lot more than a regular house inspector.
9. Rent a truck or U-Haul and pay some friends to help you out. This is going to be your first house so you are not going to have enough stuff to need a moving company. It cost thousands of dollars to hire a company to do things that you and a couple of buddies can do just as easily. Pay your friends some good money to help you out. They are helping you out and saving you a ton of money (and trust me helping you move is the last priority on their lists).
10. Have a house warming party! Itís a big time in your life and you should be able to celebrate. A lot of times people will buy you gifts which is always a good thing. I recommend having a ďstock my barĒ party. Everyone buys a different kind of liquor to ďstockĒ your bar. Itís the party that keeps on giving.

2 Responses to “Buy The Right House. Buy The House The Right Way.”

  1. StressLess Says:

    We hired a home inspector for well over $300 (11 years ago), which turned out to be totally useless. I found out later that there are practically no standards or licensing standards, at least in our state. Any know-nothing can call himself a home inspector. It should have been a tipoff when the real estate agent asked him for a business card--thinking back, the agent was probably thrilled that this guy missed so much stuff and helped the sale go through.

    We hired him in the first place because a) we knew we were starry-eyed and would miss things and b) we weren't going with an FHA mortgage, so there wasn't automatically going to be an inspection involved. He mentioned nothing about the water pipes downstairs, which our plumber just told us about and would have been an obvious problem back then, too. There were places that appeared to have electric outlets because the owners were running tvs or whatever. Then we found out they had done things like run an extension cord up from the basement through a hole in the wall.

    Thanks for the tip on using an engineer instead. Maybe next time we'll try that. Or, go FHA just because they're picky and won't let much get by.

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