Hearthside Happenings

What You Need To Know When Buying A Home


This guide aims to help you rise above the stress when buying a home!
Posted: September 05, 2019 by Joe Carelli

Buying a house could be one of the biggest decisions you make; so don’t overlook the important things


Did you know that buying a house is considered to be one of the most stressful times in a person’s life, right up there with an important job interview or applying to college? In fact, over 30% of house hunters admitted to being reduced to tears at some point in the home buying process. If you’re on the hunt for a new house, you may want to educate yourself on the following points so that you know what to expect, before you begin your journey for the perfect place to call home. 


Get Pre-Approved (vs. pre-qualified) -- If you are in the market for a new house, then you probably have heard the terms “pre-approved” and “pre-qualified” get tossed around, but the two are not created equal. Today, most sellers won’t waste a second thought on a buyer that does not have a pre-approval letter. 


In other words, buyers that come to the table with proof that they have the ability to buy and a lender ready to loan them the money will always have the upper hand. This is what a pre-approval does for you -- unlike pre-qualification that just shows a rough estimate of what you could afford based on your figures, but with no credit check or verification.


Finding an Agent -- It might be tempting to conduct your house hunt on your own, after all, a lot of people find their future home online, but your search will go much more smoothly with the help of an experienced, knowledgeable agent. Even when people find a house that they like online, many of them enlist the help of an agent to assist them with getting a closer look. 


In fact, in 2018, 87% of buyers used an agent, and that number is on the rise. Considering that using a real estate agent is completely free for a prospective buyer, it’s a no-brainer.  So, how do you find an agent that is the perfect fit for you? 


One way is to attend a few open houses of properties that you are interested in because there will be agents present. Another way is through referrals from others who have used the agent. No matter how you build your list of potential agents, make sure to have questions ready to ask them about their experience, knowledge of the area and other items that will affect your relationship.


Know What You Can Really Afford -- This is a critical step when you start your home search. If you get pre-approved by a lender for a particular amount, this does not necessarily mean that this is what you can comfortably afford. Lenders only look at certain information when determining the amount of money that they will offer to loan to you -- mostly, your debt to income ratio. However, you know your lifestyle. A lender isn’t going to look at how often you like to eat out at restaurants, or if you have three dogs or two kids in private school. Therefore, be realistic when you work out the budget for your new mortgage payment, and don’t assume that the lender’s figure is within your financial reach. 


There’s no use having the house of your dreams if you have to live house poor. Knowing your absolute max will also come in handy if you find yourself in a bidding war with other potential buyers. If the selling price surpasses an amount that you are comfortable with, then you have to be willing to walk away (or figure out a way to come up with more money.) Whatever you do, don’t fall into the trap of talking yourself into something that will ultimately cause more stress in your life -- buying a home that you cannot afford. 



View Houses with an Unbiased Eye -- Once you have your pre-approval letter, have found your agent and you know your max price, you are in a good position to start your house hunt. When you start looking at properties, it can become overwhelming if you try to focus on every little thing and insist on holding out for a property that checks off all of the boxes on your wishlist. The odds are high that any property that meets all of your wants will be out of your price range. 


The more realistic scenario is that you’ll find a house within your budget that meets most of your needs, some of your wants and that will require you to make some compromises. Therefore, do your best beforehand to know what your absolute deal breakers are and for what elements you are willing to allow a little wiggle room. For example, maybe you don’t need that bay window after all, but you will not budge on needing a walk-in closet in the master bedroom. 


Get an Appraisal -- Ah, the dreaded appraisal. This is the time where many buyers bite their lips and chew their fingernails. You know your lender is ready to loan you a certain amount, but if the property of your dreams appraises for less, well, that is all you’re going to get. 


If this happens to you, there are a few scenarios that may occur; the sellers may reduce the price, you may need to come up with more money for a down payment to lower the amount to be financed, or you might decide to walk away. One question to keep in mind if the seller does not lower the price is, are you willing to pay more for the house than it is worth?


Home Inspection -- Buying a house is a big investment, and quite possibly the biggest one you will make. Therefore, it makes sense that you should protect yourself before you sign off on any permanent decisions. In your contract, include a provision for a home inspection.


In other words, you agree to purchase the property, pending the results of a home inspection. Then, you give yourself the opportunity to walk away if the inspection comes back with overly costly repairs and problems that the seller is unwilling to address. 



Protect Your Investment -- A home inspection helps to protect you before you officially purchase the property, but once your new home is all yours, you want to make sure that you protect your investment. Research different options for homeowners insurance and any other insurances that may be necessary in the area where you are buying, for example, flood, earthquake, etc. 


Gather a variety of quotes and make sure you understand exactly what each policy covers before making your final decision, but regardless, you will want to carry insurance on your home to ease potential losses due to damage, theft, and more. If you are securing a mortgage, your lender will require you to show proof of insurance in order to close on the property. If this is the case, make sure the insurance that you secure meets any requirements set forth by your lender.


Closing Day -- The day of the closing is the day where all of your hard work and searching comes to a close, no pun intended. Within 24 hours of your closing date, you should have the opportunity to do a final walkthrough of the property to make sure everything is in order and as promised. 


On the day of the closing, you will need to have your down payment ready, proof of any required insurances, your government-issued ID and a lot of stamina. If you are purchasing your home with a loan, be prepared to spend a lot of time signing papers -- a lot of papers. Honestly, you will probably lose count of the number of times you have to sign your name, but when it is all done, you will get the key to your castle.


Once your new house is officially yours, all that is left is to make it your own! Make sure to transfer utilities into your name, change your address, and move your belongings into the house. It’s time to make your house your home! 


For more insights into the home buying process, or if you are ready to start your home search, then reach out to one of our qualified REALTORS? today! We would love the opportunity to answer any questions that you may have and help you start this important journey! 

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