Home Buyer’s Guide (Sample)

BUYING PROCESS

Focus On The Features

It is very easy to become charmed and infatuated with a house and see only the things you like, especially if you are a first-time homebuyer. So, have a good idea of what you are looking for before you go looking. It will be the best insurance you have to make sure you “find the right one.” It should be a house that fits your personality, your everyday living needs, and your future goals.

What Kind Of House Is Right For You?

Start pinpointing the specifics in your new home by taking an inventory of your basic day-to-day needs. For example, if you entertain frequently, you might need a party/recreation room - maybe extra baths.

Next, think about the future. Will you start or add to your family? Will an elder family member come to live with you? Your new house should be able to accommodate such possibilities.

Last, think about the personality you want for your new home. Should it be open, airy and casual, of formal and classic? Ideally, it should reflect you.

As you think over the above considerations, remember that your financial resources will determine which cutbacks or extras you might consider.

The sections that follow are designed to help you consider other important issues as well.

Old House? New House? Fixer-Upper?

Older houses have great charm. Older homes in established communities may provide greater convenience for shopping, entertainment, and business.

Most new homes offer the lastest design features. If you buy a house before construction is complete, you may be able to select the color and design for any tile, carpet, wallpaper and paint.

A fixer-upper can dramatically increase in worth. Even small improvements can make a difference. Make sure you understand the extend of fixing that needs to be done before you commit to it.

Cosmetic improvements, such as new windows or floor treatments, can increase your home’s appeal now and later for resale. Make sure your proposed improvements match the neighborhood environment ; don’t go overboard and overspend.

Find the right neighborhood by consulting your real estate broker and driving through new areas. Talk to neighbors if you get the opportunity. While driving around new or different areas, stop and walk around as well.

WHAT PRICE RANGE IS RIGHT FOR YOU ?

 

How Much Do You Have For A Down Payment?

Many new homebuyers put down 20 percent or more toward the purchase of their new home, but there are many programs which allow for very small or even zero down payments. Some lenders may accept a lower payment ; however, you may be asked to purchase Private Mortgage Insurance called “PMI.” This however, will add to your closing costs and monthly payments. Whether your lender requires borrowers to purchase PMI or not, there will be other costs associated with purchasing your home in addition to the down payment. Some of the money you have available will need to be earmarked for these secondary or closing costs. What is left over is what you will be able to use toward a down payment.

What Are Those Other Costs?

Those secondary costs usually include closing costs. These costs are the expenses associated with the transfer of property ownership. As a rule of thumb, these costs can range from about 3 percent to 4 percent or more of the cost of the home, depending on your lender and area of the county. They can include attorney fees, lender fees (or points), escrow fees and recording charges. Your broker or agent can explain any of these costs in greater detail. You may also want to hire a building inspector to evaluate the home. You may want to make a few immediate repairs prior to moving day. Do not hesitate to discuss any of these costs with your broker. The sooner you know how much you will need, the sooner you will be able to determine a more accurate down payment and purchase price.

How High Should You Go On Your Monthly Payment?

The answer will depend on how much you require for other living expenses. One thing you certainly do not want to do is to make yourself so “payment poor” that you cannot afford the quality of life you have envisioned in your new home. You can begin to get an idea now of what your monthly mortgage payment might be by listing some of those expenses, and estimating what you think you will be paying for them in future years. Living expenses can include food, clothing, transportation, utilities, medical and dental care and installment payments. Understandably, you may not have all of this information at hand, let alone the time to compile it. For a quick check to see that your monthly income will cover your monthly expenses, see the next page.