101 Tips for a Smoother Home-Buying
Process
by Brandon Cornett
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 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.
* You may republish this article
if you retain the author's note with
active hyperlinks below.
About the Author: Brandon
Cornett publishes the popular Mortgage
Refi Blog and several other real
estate websites. Visit the author
online at http://www.mortgage-refinance-advice.com/blog/