Buying a House: Four Important Things To Know
Buying a house is one of the biggest decisions most people make. Few other purchases require as much planning, knowledge and money…not to mention the considerable time and effort to find the right home.
As the housing market rebounds, inventory is growing scarce. As a potential buyer, it’s critical to be prepared and focused, so you can move quickly and efficiently on the right opportunities, avoid common mistakes and save a lot of wasted time:
1. Clean up your credit rating in advance. Chances are, you’ll be applying for a mortgage. The best time to start planning for that is 4-6 months before you start house-hunting. Get copies of your credit report from each of the three bureaus and go through each report carefully to make sure it’s accurate. If you find errors, report them, following each bureau’s procedures exactly, so they can be fixed.
2. Stick to your price range. CNN Money suggests that all prospective homeowners go beyond the real estate industry’s traditional affordability rule (two and a half times annual salary) and instead use one of the many online calculators available, to better understand how your income, debt and monthly expenses affect affordability. Once you have your desired range, stay disciplined. Don’t waste time or jeopardize your financial future looking at homes that exceed your affordability.
3. Get pre-approved before you start shopping. This sends a powerful signal to sellers who are increasingly receiving multiple offers: they will know you’re a serious buyer. Also, don’t mistake “pre-qualification” for “pre-approval”. As CNN explains, pre-qualification “is based on a cursory review of your finances, pre-approval from a lender is based on your actual income, debt and credit history.”
4. Always hire a home inspector. An experienced inspector knows what to look for that you may not – even if you consider yourself an advanced do-it-yourselfer. He or she can point out red flags and potential problems that could save you major buyer’s regret. Even if you still choose to make the purchase, you may have stronger negotiating power on selling price if you have specified an inspection as part of contract terms. Many standard real estate contracts include rights of inspection, but it’s a good idea to consult with a real estate attorney to ensure your interests are protected.
Once you’ve found your perfect home, protect it:
While homeowners insurance covers storms, fire and other catastrophic events, few will help you when your plumbing, air conditioning, or expensive appliances suddenly break. Even one repair or replacement can run thousands of dollars. Protect yourself against the high costs of unexpected repairs with comprehensive, low-cost TotalProtect® Home Warranty coverage.
The information in this article is intended to provide guidance on the proper maintenance and care of systems and appliances in the home. Not all of the topics mentioned are covered by our home warranty or maintenance plans. Please review your home warranty contract carefully to understand your coverage.