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I created this list for two reasons.
First, I want to give you a good understanding of the home buying
process from start to finish. Secondly, I want to help you
identify those areas where your knowledge-level is lacking, so you
can conduct further research on your own.
Preliminary Considerations
1. Learn the home buying process in
advance. You'll make much better decisions with a better
understanding of the process.
2. Learn the lingo while you're at
it (especially all the mortgage terms). You'll have a smoother
home buying experience if you "speak the language."
3. Obtain your credit report. To
get copies from all three credit bureaus at once, visit
www.AnnualCreditReport.com .
4. Review your credit report. Make
sure there are no errors. Check everything from the administrative
information to the credit history.
5. Fix errors quickly. If you find
an error on your credit report, go to the company's website where
the report came from (TransUnion, Equifax or Experian) to contest
it. Don't delay.
6. Run the numbers. Use an online
mortgage calculator to get an idea how various mortgage amounts
translate into monthly payments.
7. Check your debt-to-income ratio.
Mortgage lenders prefer your overall debt to be no more than 20%
of your net monthly income. If your debt is more, pay it down as
quickly as possible.
8. Start saving your cash. Mortgage
lenders like to see that you have some cash reserves on hand, and
you'll need them for any unexpected fees or costs that might
arise.
9. Get pre-qualified.
Pre-qualification is an informal review of your finances by a
mortgage lender to see what amount you might qualify for.
10. Avoid new lines of credit.
Don't sign up for new credit cards or make any large credit
purchases while you're "under review" by a mortgage lender.
11. Add
www.HomeBuyingInstitute.com to your Internet favorites
or bookmarks. Few websites contain as much helpful home buying
information for first-time buyers.
Finding a Real Estate Agent
12. Ask friends or family. People
who know you well are in the best position to recommend an agent
who is right for you.
13. Talk to multiple agents. Don't
think you have to sign on with the first agent you meet.
14. Ask how they search. Make sure
your agents is going to use every means possible to find the right
home for you. That means using the MLS in addition to their
preferred listings.
15. Ask how they network. An
experienced agent will often be part of a vast network of real
estate professionals. This can sometimes help you find a home
before it's even listed.
16. Ask about mortgage connections.
It will save you time and headache if your agent can point you
toward a good mortgage company.
17. Read paperwork carefully. At
some point, your chosen agent will ask you to sign an agency
agreement. It's usually a boilerplate document, but be sure to
read it carefully all the same.
18. Consider the "vibe" factor. You
might be working with this person anywhere from 2 to 12 months, so
it certainly helps if you like them on a personal level.
19. Exchange cell phone numbers.
You should have your agents cell number in your wallet, and vice
versa. You don't want to miss an opportunity simply because you
couldn't be reached.
House Hunting
20. Create a "need vs. want" list.
Make a spreadsheet or checklist of the things you need in a home,
versus the things you want. Print a copy for each house you visit
and check items off.
21. Practice self-reliance. Don't
over-rely on your agent when it comes to finding a home. Get out
there and do some hunting yourself. It's a necessity, but it's
also exciting!
22. Use multiple channels. The more
channels you use to search for a home, the better. Read the
newspaper, cruise the neighborhoods, and surf the web.
23. Use the Internet to your full
advantage. Bookmark the real estate listing sites you find most
helpful. Visit them once a day and write down new homes that meet
your criteria.
24. Create a Google Alert. Visit
Google's home page, click on "More" and find the Google Alerts.
Enter real estate phrases for your area, and you'll get daily
updates with news and info.
25. Feel free to snoop (sort of).
When house hunting, it's okay to peek into dark corners,
basements, storage sheds and the like. Respect the owner's
privacy, but see the whole house.
26. Ask plenty of questions. Don't
be shy about asking the sellers questions, if they're home.
27. Validate the asking price. It's
called an "asking price" for a reason. Compare it to recent sales
in the area. Your agent should be expert at this.
28. Consider shopping, dining and
the like. Is the home near the places you frequent, or will it be
a long drive?
29. Consider the commute. If you're
a daily commuter, distance is a big consideration.
30. Visit during rush hour. Is the
home hard to access or exit during rush hour? Is there a lot of
traffic noise?
31. Check out the zoning. Are you
surrounded by residential areas, or is there a soon-to-be-used
commercial zone right across the street?
32. Research the neighborhood, not
just the house. Neighborhoods impact property value as well as
your own happiness.
33. Research taxes. Sometimes, two
neighborhoods right across the street from one another will have
different tax situations. Don't make assumptions.
34. Research future development.
Will that nice meadow down the street be a highway extension or
shopping mall in two years?
35. Bring a "disinterested
witness." A level-headed friend or family member will help you
judge the pros and cons of each home.
36. Avoid "The One" syndrome. Don't
pull up to a home and say, "This is the one!" It might be, but you
need to be cool-headed and open-minded during your first visit.
37. Bring a digital camera. It's a
great way to record the details of each home for later review.
38. Bring a notepad. Jot down some
notes about each home, and label each page by address.
39. Ask about ghosts, poltergeists
or other forms of haunting. Just kidding.
40. Think five years ahead. Will
the home still suit your needs if your family grows?
41. Play home inspector, casually.
The full inspection will come later, but you should at least give
the "big ticket" items (roof, heating system, etc.) a glance when
visiting.
42. Keep an eye out for mold,
standing water and other symptoms of disrepair.
43. Research schools. This is
important whether or not you have school-aged children. Schools
affect property values.
Making an Offer
44. Base your offer on evidence,
not emotion. Remember, the lender will appraise the home later on.
If it appraises for less than you've agreed to pay, you'll have
problems.
45. Use your agent's experience. It
might be your first offer, but your agent has probably seen
dozens.
46. Discuss contingencies. Will
your offer be contingent upon something, like the sale of your
current home?
47. Prepare for all possible
responses. What will you do if the seller makes a counteroffer or
rejects your offer outright? Conduct "rehearsals" for each
scenario.
48. Move quickly (but cautiously)
in seller's market. Delays can cause a home to slip through your
fingers.
49. Plan the closing date. This
will normally be agreed upon during the offer process.
Choosing a Mortgage
50. Study the different types of
mortgages, especially the pros and cons of each.
51. Consider your staying time. How
long you plan to stay in a home will often determine which type of
home loan is best for you.
52. Learn about new mortgage
packages. A variety of "creative financing" loans have emerged in
recent years. Learn about them.
53. Shop for the best interest
rate. Mortgage lenders will offer different rates based on how
comfortable they are lending to you. So shop around.
54. Read up on RESPA. The Real
Estate Settlement Procedures Act protects you from unethical
lenders. Familiarize yourself with it.
55. Consider paying points. A point
is one percent of the loan amount. Paying points can lower your
interest rate. Look into whether or not it's a good idea for your
situation.
56. Don't go it alone. Ask your
agent for advice. Talk to friends and family who've been through
the home buying / mortgage process before.
57. Factor in PMI. If your down
payment is less than 20% of the loan amount, you'll probably have
to pay private mortgage insurance (PMI).
58. Visit the mortgage section of
HomeBuyingInstitute.com. You can learn about everything mentioned
above, in much greater detail.
59. Watch out for unethical
lenders. Talk to your agent or real estate attorney is something
seems strange or too good to be true.
The Mortgage Application
60. Be honest. Don't let anyone
talk you into falsifying information on your mortgage application.
You'll be the only one held accountable.
61. Ask questions. And ask them
again, until you're comfortable that you understand each part of
the application.
62. Read the fine print. Often, the
most important parts of an application are in the fine print.
Don't let these details go unnoticed.
63. Don't sign blank areas. If a
section of the mortgage application is blank, either 'X' it out or
leave it unsigned.
64. Keep a copy for yourself. This
applies to all documents during the home buying process. Start a
folder with copies of everything.
65. Get a truth-in-lending
statement. After you apply for the loan, the lender is required to
give you an estimate of the total costs associated with the loan.
66. Plan for more than
truth-in-lending statement. Unfortunately, it's common for the
actual costs of a loan to be more than the lender's estimate. So
plan for more.
The Home Inspection
67. Get a home inspection! At
around $500, it's a small price to pay for peace of mind.
68. Hire a certified inspector.
Anyone can claim to be an inspector. So make sure yours is
certified by a professional organization.
69. Tag along if possible. You'll
learn a lot about the inner workings of the home.
70. Categorize discrepancies, based
on whether or not you want the seller to fix them.
71. Be realistic with repair
requests. In a seller's market, you may not get all the repairs
you want. So be realistic with what you're asking.
72. Get a termite inspection. Make
the offer contingent upon a termite-free inspection.
The Home Appraisal
73. Understand the appraisal
process. It's for the lender's protection, but it will also tell
you if you're overpaying for the home.
74. Have a plan for
under-appraisal. You can pay the difference, the seller can lower
the price, or you can walk.
Pre-Closing / Pre-Settlement
75. Read up on closing procedures.
Start with a refresher on RESPA.
76. Talk to friends and family
who've been through a closing process. Learn from them.
77. Stay in touch with your lender,
your agent, and the escrow company. Make sure they have all the
paperwork they need to avoid delays.
78. Keep saving your money. Real
estate closings often come with unexpected costs.
79. Be on the lookout for your
HUD-1 statement. You should get one several days before closing.
It will list the total amount due at closing.
80. Transfer utilities. Now might
be a good time to start putting the utilities into your name.
81. Get hazard insurance. Most
lenders require it, but it's mainly for your own protection.
82. Conduct your final
walk-through. Make sure all requested repairs have been made.
83. Get a certified check for the
amount due on the HUD-1 statement.
84. Confirm the time and location
of the closing.
The Closing / Settlement Process
85. Bring your ID. The escrow
company will probably want to verify it.
86. Don't forget the check!
87. Bring some blank checks, just
in case unexpected costs or fees arise.
88. Don't feel rushed. Escrow
companies do it for a living, but it's probably you're first time.
89. Read thoroughly. People make
mistakes, so read each document carefully (especially the
bottom-line amounts).
90. Ask questions. You're not being
a pest for asking a lot of questions. You're simply looking out
for your finances.
91. Don't make assumptions. For
example, just because you agreed to buy mortgage points for a
lower interest rate, don't assume it has been processed that way.
Check the paperwork.
After Closing
92. Follow-up on your utility
transfer.
93. Complete a change of address
form for the postal service.
94. Notify friends and family of
your new address. Postcards and emails work well.
95. Get a safe deposit box for your
important documents, like your homeowner's insurance policy.
96. Set up auto-pay for your
mortgage payments. It will be one less hassle to worry about each
month, and it will also help you avoid missing payments.
97. Go meet the neighbors. If your
neighbors don't come and introduce themselves, go say hello.
Remember, these are the people who will keep an eye on your home
when you're away.
98. Ease into your mortgage
payment. Before filling the house with new furniture or
electronics, give yourself a few months to adjust to the new
mortgage payment.
99. Do the happy dance (whatever
your version might be). Just remember to stretch first.
100. Break out the champagne, or
your preferred non-alcoholic beverage.
101. Exhale.
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