Advice On Buying A New Home

Online, July 18, 2010 (Newswire.com) - Owning your own home is part of the American dream. But if you're not prepared, buying it can be a complete nightmare. There are a few things to consider before you take the plunge.

First, don't buy unless you can stay put. If you can't commit to living in one place for at least a few years, then owning is probably not the best thing for you for now. With the transaction costs of buying and selling a home, you may end up losing money, even in a rising market.

If you do decide to buy, you should start by shoring up your credit. Since you will most likely need to obtain a mortgage to buy a house, make sure your credit is as clean as possible. Before you start house hunting, get copies of your credit report, make sure the facts are correct, and fix any problems you discover.

When looking to purchase a home, look for housing that is priced about 2.5 times your annual salary. You may want to look online at a mortgage calculator to get a better idea of how your income, debts and expenses affect what you will be able to afford.

If you can't put down 20 percent, you may still qualify for a loan. There are a variety of private and public lenders who offer low interest mortgages that require a down payment of as little as 3 percent.

Look in an area that has good schools, even if you don't have children. This will help your home have a greater resale value. You'll also want to get professional help. Using a licensed real estate agent or exclusive buyer agent, can help you with strategies during the bidding process.

When choosing a mortgage, you will have the option of paying additional points, a portion of the interest you pay at closing. This is usually done in exchange for a lower interest rate. If you stay in the home for at least three years, it's a better deal to take the points. The lower interest rate will save you money in the long run.

Get pre-approved before you begin house hunting. This will save you time and prevent you from looking at houses you can't afford.
Do your homework before you even bid on a house. You should base your bid on the sales trend of similar homes in the neighborhood. If homes in the area have been sold recently at 5 percent less than the asking price, you should make a bid that is 8 to 10 percent lower than what the owner is asking.

You should hire a home inspector, preferably an engineer with experience in doing home surveys, to help point out any potential problems at the home you are considering buying.

If you do purchase a home that has minor problems, consider obtaining an unsecured personal loan to help pay for the repairs.

Whatever your situation, using these tips, finding your dream home will be the first step toward living out your dreams.