The Top Five Items When Considering Buying a New Home

For first time home buyers, purchasing a new home can be a very complicated and scary process. Without taking the right precautions, the failed purchase of a new home can leave ones credit and savings in a catastrophic state. There are thousands of precautions to be taken into consideration and potentially branched out from these principals. The characteristics of the buyer and home will require ad hoc preparations and decisions.rnIf you’re purchasing a new home or a first time home buyer, consider the following: 1. Map Out the Expenses of Home Ownership Before you even head out into the housing market, ask yourself if you can even afford a home. Compile a list of every one of your bills. This list should include your insurance, car payment, credit cards, cell phone, food, gas and other financial obligations. This list should not clean your savings out because it’s always a good idea to have reserve funds tucked away for emergencies. For this particular list you should not include the cost of your current rent. When this list is compiled, how much do you have left? Will the leftovers of your income cover the cost of a mortgage, home insurance, utilities, waste management, property tax, mortgage insurance, home warranty or other services? If you’re unsure of how much each of these are, they will all be different based on the age of the house and appliances as well as where the home is located. If you can’t make these kinds of payments on your own, it might be a good idea to wait a while, or consider getting roommates to help with the ease of the bills. 1. Know Your Credit Score Knowing your credit score gives you an informed hand during the negotiations of a mortgage price with your lender. Due to the increasing occurrence of identity theft, many have had their credit scores compromised without even knowing it. Before searching for a house, it would be a good idea to research your credit score to dispute any possible fraudulent activities. Your credit score is made up of several different factors including your payment history, amounts owed on accounts, length of credit history, new credit inquiries and types of credit used. Keeping these elements in line will give you a good credit score which could help decrease your mortgage payments (assuming that you are approved for a mortgage loan) and give the lender faith that you are a dependable person of your word. 2. Find what you’re looking for and don’t settle- If you’ve gotten past the point of covering your grounds on financial coverage and a good credit score, now you can start looking for a home. When you’ve found a home that is within your price range, do your research. It’s a good idea to bring different kinds of inspectors in to double check the findings of the realtor. There are many different things like backwards plumbing, mold, poor foundation, or faulty electrical wiring that could be invisible to the unspecialized eye. Research the age of the home, many homes that were made before 1978 could have lead in the paint causing potential health issues. Another good idea is to research the builder and lender. If any of these parties are sub par, you may want to think twice about investing your life into them. 4. Shop For Lenders If you are not satisfied with the payments or options that the lender is offering you, perhaps you should look into getting financing from your bank or credit union. Many builders will insist that you get financing from their lender because they will keep in close contact of how payments are going, however, there are often workarounds to this issue. Another good step to take for preparing yourself is to ask your lender to guarantee their Good Faith Estimate. A Good Faith Estimate is a written document for you that will lay out all of the costs in application with your financing. If your lender is not willing to guarantee this, you should walk away from this to protect yourself from any possible unlisted hang-ups that might appear. 5. Understand the Language of the Contract Understanding the legal language of your mortgage contract may be extremely confusing. Often times new home buyers will ask their lawyer to read over their contract to clear up any confusing language that might exist. One common issue with mortgage contracts is the removal of contingencies and your cancellation rights. Have your lawyer help you understand your liability and commitments. The language in these contracts often don’t even seem like they’re in English and you could be signing your name down for something you don’t know about. Purchasing a new home is not as easy as going to the store and saying “that one”. The more that you know about your selection, rights and necessities, the more time, money and hassle you will be able to save yourself in the end.