Buying a house is expensive and intimidating. The majority of Americans aren’t properly informed about what’s involved, with 64 percent of people lacking knowledge about what they need to even qualify to buy a home. That’s why learning about the process is crucial if you’re thinking about buying real estate. It’s important to be an informed buyer when deciding to invest in something as big as real estate. You can find tons of information online that will inform you about searching for a home, closing a deal, and everything in between.
There are some important things to know before buying a home that will make you feel more confident during the process. If you’re thinking of becoming a homeowner, search online for some insight so you know what to expect.
Here’s what you should know before buying a house.
Shopping Around For Lenders Is Important
One thing that’s more important than finding the right house is finding the right lender. Getting pre-approved for a mortgage has many advantages because it helps you understand what you can afford and allows you to secure a mortgage rate. But that doesn’t mean you should sign with the first lender you come across.
Compare at least three to five lenders before signing a contract. Search for the best offer and understand how many costs and fees are required from each lender. Taking your time and finding a lender with the lowest interest rate, even by just 0.5 to one percent, will help you save money in the long run.
Homebuying Is A Slow Process
You can’t always predict how long it will take to close a deal on a home. The average home buyer will spend 12 weeks searching according to the National Association of Realtors, and it could take anywhere from 90 to 120 days for an offer to be accepted.
That being said, don’t plan too far in the future with a strict timeline that hinges on being a homeowner. You could end up forcing yourself into a house that’s not right for you or settle on a price that isn’t in your best interest.
Buy Within Your Current And Future Means
It’s easier to understand what you can afford now while homebuying. But an important factor to keep in mind is if you can afford the home five, 10 or even 20 years from now.
For example, this is especially important for couples whose current expenses are a lot lower than they would be if they choose to start a family later on. Think critically about your future lifestyle to ensure you’ll still be able to comfortably pay for monthly mortgage costs.
There Are A Lot Of Unexpected Costs
It’s important for home buyers to understand how much money the process requires. Aside from the down payment and a realtor’s costs, there are a lot of hidden costs you need to save for. You’ll have to pay for a home inspector to check out your potential home, title-based fees, appraisal fees and more.
Other costs you can expect to pay when buying property are:
- Lender fees
- Survey and appraisal fees
- State recording fees
- Private mortgage insurance
- Escrow fees
- Agent commissions
Transitional costs are another factor to keep in mind. This could be having to pay an extra month’s rent or previous mortgage, hiring a moving company, buying new appliances or furniture and other necessary costs. Make sure to keep that all in mind when you’re budgeting to determine what you can afford.
You Might Be In Charge Of The Abstract
There’s a lot of paperwork involved in home buying, and one of the thickest stack of documents you’ll encounter is the abstract. This is paperwork that summarizes the history of ownership of a property and includes information about the previous owners, original land, the subdivision and more.
You might end up with the abstract, which is important to have in case you need to sell the property down the road. There might only be one copy and it’s expensive to replace, so make sure not to lose the abstract if you’re given it.
Inspectors Will Always Find A Problem
Home inspection fees can cost anywhere from $400 to $1,000, depending on the size and location of your home. During the inspection, a professional will check out the electrical, plumbing, structural elements and more to uncover problems and make sure the home is in good condition.
If the inspector finds something that needs fixing, it gives you leverage with the seller. You can ask for it to be replaced or even negotiate a lower selling price. That being said, do your research and understand the difference between things that can be fixed and what should be a deal-breaker when buying a new home.
Do Your Research Before Home Buying
There’s a lot to know about buying real estate. Doing your research beforehand can make the process a lot easier and less intimidating. Understanding how it works can also help you feel more confident and skilled at getting what you need and sticking to your budget.
Don’t be afraid to ask questions. Your real estate agent is a great source to understand the logistics of home buying. Talk to friends or family that have recently purchased real estate who can give you insight into more personal aspects of the process.
Any question you have about real estate has already been asked. Search online for instant answers and explore other resources that can get you more informed