7 Things To Cross Off Before Buying a Home

Evaluate your preferred neighborhood

Visit the area at different times, including during heavy commute times, weekends and later in the evening. What’s the traffic like for kids in the neighborhood? How far is the nearest grocery store? Also, talk with the neighbors in your desired community. What do they like about the area? What do they dislike? Their perspectives may offer greater insight into your desired location.

What type of home best suits your needs?

You have several options when purchasing a residential property: a traditional single-family home, a townhouse, a condo, or a multi-family building with two to four units. Each option has its pros and cons, depending on your homeownership goals, so you need to decide which type of property will help you reach those goals.

What specific features will your ideal home have?

While it’s good to retain some flexibility in this list, you’re making perhaps the biggest purchase of your life, and you deserve to have that purchase fit both your needs and wants as closely as possible. Your list should include basic desires, like neighborhood and size, all the way down to smaller details like bathroom layout and a kitchen that comes with trust-worthy appliances.

How much mortgage do you qualify for?

Before you start shopping, it’s important to get an idea of how much a lender will actually be willing to give you to purchase your first home. You may think you can afford a $300,000 home, but lenders may think you’re only good for $200,000 depending on factors like how much other debt you have, your monthly income and how long you’ve been at your current job. There are number of different loans that you may qualify for so be sure to explore all your options.

Understand rate vs. points 

With the many financial considerations that go into buying a home, none may be as confusing to first-time homebuyers as the issue of “points.” To start, in the real estate arena, points are generally a fee that is paid to the lender to lower the interest rate on your mortgage. One point is equal to 1 percent of the loan amount. Is it better to get a lower interest rate by paying points upfront? Or are rates so low that the reduction offered by “buying down” the rate is minimal? Consider these options carefully, and make use of the many online tools and calculators to help you understand the cost implications of both. Borrowers with higher credit scores — like those with scores of 720 or above — can often shop around for the lowest available interest rate and get a conventional loan. Borrowers with lower credit scores, especially those with scores of 640 and lower, may experience higher rates because of the potentially higher assumed risk by the lender. For these borrowers, don’t be discouraged if you can’t get the lowest rate. There often are still many promising loan options available, and the difference in payment due to the higher rate may be less than you expect.

Get credit ready

Buying a home may be one of the largest financial decisions you ever make. Be prepared. Get a copy of your current credit report, identify any discrepancies, and get them fixed — if possible — before you talk to a lender.

Work with a local agent  

Pinpoint the area where you’d most like to own a home, and then connect with a real estate agent who works in that area. Make sure that the agent has worked extensively in that neighborhood and has insights into local matters like taxes, schools, new developments and other issues that may be important in the contract process. Ask how many homes the agent has helped buyers purchase in your desired location to gauge their experience working in that particular area. Agents who list homes also should have a good understanding of fair market value for the homes you’re considering