Home Buying Check List

You might have noticed in the news that 30 year mortgage rates hit new record low. This is the perfect time to buy a home with many people selling or being foreclosed on it is a buyers market. To make one of the largest investments in your life I decided to put together a list of things you should know before spending your hard earned cash.

1) Be debt free. You should have no credit card payments, car payments, or owe money to any person or company. You should also have saved up an emergency fund  of 3 - 6 months. That means saved up 3 to 6 months of your take home pay in the bank. You also need to have 10% to 20% down payment before you get started.

2) Get pre-approved and lock in your interest rate for a 15 year not 30 year loan. When I went shopping for a loan I went to several banks and mortgage brokers before I got the interest rate I wanted and had it locked in for 90 days. Things you should have when you shop for a loan: Pay stubs at least the last two. Have a net worth worksheet worked out. You will be amazed at how much money you may qualify for, just remember your monthly payment should not exceed 25% of your take home pay. Now why a 15 year and not a 30 year loan, the difference in monthly payment is usually minimal however the interest paid is significant. Lets assume your house cost $100,000, you put down $20,000 and borrow $80,000 at 4.58%. Your monthly payment would be $410.00 a month and you will pay over $67,000 in interest over 30 year. Now lets change to a 15 year mortgage all other things remaining the same you will pay $616.00 a month and pay about 31,000 in interest over the 15 years. Paying an additional $206.00 a month will save you $36,000 in interest payments. Plus you house is paid for in half the time.

3) Never fall in love with a home and choose your Realtor wisely. I fired 3 before I found one that would listen to me. They would show me houses that I wanted to buy which was fantastic, however when it came time to make an offer on a home, the fist three would not do what I asked. They work for me not the other way around. For example, a home was listed for $187,000, my Realtor told me to bid full price, I said bid $130,000. They told me I needed to offer full price again, to which I said offer $130,000 or be fired. They chose to be fired. Remember any product is only worth what a person is willing to pay for it. The seller may want a lot more than what the buyer is willing to pay always negotiate. My home appraised for $138,000 and I bought it for a lot less. I liked the home but if I didn't buy it I wasn't going to cry, so by offering a lower price I was able to negotiate a lower price.

4) Get a home inspection and walk with the inspector. Be sure to include in your contract that if the inspector finds problems that the seller will pay to have the problems fixed at their expense or lower their asking price so that you will be able to fix the problems. I would always spend a few hundred dollars for an inspection to save thousands in the future.

Well that's my story. How yours turns out is up to you. If you need assistance I will be more than happy to coach you on the purchasing of your home. Send me an e-mail and we can start the process of home ownership.

Harry.