We finally sold our house. It has been on the market for almost 3 years, on and off. We sold it for $20,000 less than what we paid for it and for $60,000 less than what itÃ¢â‚¬â„¢s worth. Yes, you should cry for me. ItÃ¢â‚¬â„¢s awful. But at least it is sold finally and we can move on with our new life and into a new home in our new city.
ItÃ¢â‚¬â„¢s been about 8 years since we last bought a home and the housing market has changed a lot. The way you get a mortgage has changed and there is a lot more negotiation power wielded by the buyer. ItÃ¢â‚¬â„¢s a buyerÃ¢â‚¬â„¢s market; at least that is what our real estate agent keeps telling us.
There are a few things you should know before starting your search.
- You can no longer do 80/20 loans. Seems too many people got in over their head and now you can only get a loan to pay your mortgage. So expect to pay PMI, unless you have 20% to put down on your new home.
- Save your money. YouÃ¢â‚¬â„¢ll need a minimum of 3.5% down to purchase a home with a traditional FHA loan these days and 5% for a non-FHA loan. This was a surprise to us because we put 0% down for both of our previous homes we bought. Of course, the more you can put down the better. But just go into your search knowing if you donÃ¢â‚¬â„¢t have your 3.5%-5% down you will not be able to close on the home you want.
- Foreclosures are not all they are cracked up to be. Sure, you see a lot of homes for a lot less money than you would normally pay but what you donÃ¢â‚¬â„¢t realize is that there are a lot of hidden dangers to buying a foreclosed home. Buyers beware to the max. Lots of shiesty things happen to a house that gets foreclosed on. Homeowners do not go gently into that good night when losing their home.
- Check your credit. There is nothing more annoying than having a surprise credit issue pops up. You know, like your school loans being sold three times to different lenders and it showing up on your credit report as you paying out $1700 a month in school loans when, in fact, you pay about $250? That tends to affect your credit score.
- Shop around. Do not buy the first house you see. Maybe it is the right house but check out your options and give yourself some negotiating leverage.
- Never pass on a whole house inspection. Not even if itÃ¢â‚¬â„¢s a brand new house. Between build completion and time of purchase, foundations can shift, radon escapes or sub-par building can occur. As my mom always said, better to be safe than sorry.
- Always have a pre-approval letter. Real estate agents will not take you seriously if you do not have that little piece of paper from the bank. You cannot make an offer on a home without being pre-approved and if you do and you canÃ¢â‚¬â„¢t find funding, you will lose your earnest money.
- Expect to write an earnest check for at least $500-$1000 when making an offer. If you make an offer that is accepted and you renege on the offer, be prepared to kiss that check good-bye.
- When considering how much to spend on a new house, I would suggest not spending every penny that you are approved to spend. Unless you want to join the ranks of so many others who, in their pursuance of keeping up with the Joneses, over extended themselves and are now those who have had their homes foreclosed on. Circle of real estate life is a cruel one.
These are just a few things that I think every home buyer should know before starting their home search these days.
What do you think is the most important thing that a new homebuyer should know or do before purchasing a home?
Photo Source: Deborah Cruz