Wednesday, October 20, 2010

Top Ten Consumer Tips for Buying a New Home

Noted homebuilder, R. Randy Lee, CEO of Leewood Real Estate Group, was recently asked to give his top ten tips for buying a new home. This is what he had to say:

1. Before you buy, research programs that may help you to buy a home, even if you think wouldn’t qualify. Mortgage programs and programs that reduce down payments to as little as a 3% all make buying a home easier financially. Often, these programs go unused because so many people assume that they won’t qualify, when in fact many of them target a very broad income range.

2. Think long term. Your house should be a minimum five to seven year investment, so if you don’t think you will be in the same place for at least that amount of time, rethink whether buying a home is right for you. Thinking long term also means buying a home that you can really afford and that won’t overextend you even if your financial situation changes.

3. Be a knowledgeable buyer by doing your homework before you search. Be able to answer questions like: Which neighborhoods appeal to you, what are your family’s housing needs now and in the next ten years, what types of homes are right for your family. Also have a basic knowledge of your municipality’s zoning laws and their future plans. The idea is that you don’t want to buy a new home next to a corn field only to find out later that it is zoned for manufacturing.

4. Hire a real estate agent with experience matching home buyers with the right new home and who is trustworthy based on positive experiences from friends and family. An agent will need to know quite a bit about what you are looking for and how you want to live to be able to effectively match a home with your needs. It is important to rely on recommendations from people who have had personal experience – everyone looks good on paper!

5. Get preapproved for a mortgage before you start looking for a home. Learn what the mortgage process entails, find out what your credit scores are with a copy of your credit report, find out what the current interest rates are, and then shop for around for the best loan. Being preapproved lets you know what you can afford, shortens the buying process, avoids disappointments and gives you more power as a buyer. Same as with choosing a real estate broker, you need to rely on a personal recommendation when choosing a bank or mortgage broker.

6. Give your real estate agent a detailed list of things you are looking for in a home, including your price range. Being specific about items are absolutely necessary and which items would be nice to have but aren’t crucial will help your agent find the right home for you and your family faster.

7. Buy in a good school district even if you don’t have children now or plan to have children in the near future. When it comes to reselling, your property will be worth more than a comparable property in a lower rated school district, and will broaden the market of buyers.

8. After you have seen some homes and are deciding which one is right for you, list all the pros and cons of each. Better yet, have a good friend or family member make their own list and compare to see what things you may have missed. Remember to think of the pros and cons of the neighborhood as well, and for new homes to research the builder and check out their reputation.

9. Retain an attorney who has a strong track record of representing home buyers. Remember that you don’t need to a contract until you’ve worked out every detail of the sale to your comfort and satisfaction. Also ask the attorney what typical closing costs are for homes in your price range.

10. Be financially prepared. Save money aggressively for the down payment and closing costs. Avoid making major purchases of any kind or opening new lines of credit when you’re about to buy a new home, including credit cards. The foregoing may affect your ability to obtain a mortgage in the amount and at the terms that would be most advantageous to you.

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