Buyer Beware! Home Buying Tips to Take the Stress Out of Purchasing a Home

Buying a home can be intense and nerve wracking! A home purchase is generally the largest single expenditure you will make in your life-time. Buying your first home is even more stressful. There are ways to decrease your stress and make sure you won't have buyer's remorse when you are finished with your transaction. There are several points to consider when buying a home. Take the stress out of home buying by following these tips for successful home buying. Take the stress out and enjoy the process!

1. First things first. Get pre-approved for your loan amount. Select two or three lenders and submit your application for pre-approval. This will take some time, and a lot of paperwork, but it is worth it! You will need several weeks of pay stubs, your last year's taxes and any other pertinent information required by the lender. Once you have these documents organized, this will be easy. There is no point in shopping for a home unless you know how much money you can borrow. This will set your price range. Pre-approvals will strengthen your offer and entice the seller to accept an offer because they know you will be approved for the loan.

2. Shop around for the best loan rates. Shop your top three lenders. Check the rate options, loan options and fees associated with the loans. Be watchful of the fees. Many lenders (especially the larger lenders) will post a great rate, but have hidden fees. Ask for a good faith estimate of the fees associated with your loan. Compare these fees. There are origination points, closing fees, and document processing fees that vary by lender. There are also different types of loans that will dictate whether you can ask for cash back from the seller for repairs and upgrades, or closing cost credits. Many lenders will also ask for one year of insurance and 2-3 months of taxes and insurance at closing to go to an escrow account. Make sure these items are illustrated on your good faith estimate so you have a strong idea of how much money you will need to bring to the table.

Know that the dollar amount you are approved for is not always the price you can afford. Lenders don't include expenses such as daycare, gas, food, and other consumer expenses. They only include your fixed and variable debt payments such as car payments and credit card debt. Make sure to include the monthly property tax rate, insurance and private mortgage insurance (PMI) in your monthly payment calculation. PMI is always attached to a loan if you don't put 20% down. Be sure that you can afford this entire payment.

3. Find a good real estate agent. Many buyers don't understand that one agent can do the leg-work for you regardless of which agent a property is listed with. Good agents know their market and their neighborhoods. Selecting an agent can be stressful in itself. The busiest agent is not always going to commit a lot of time and effort to your cause. Select an agent that will work hard for you by choosing one that is visible, but not overwhelmed. The hungrier the agent, the harder they will work to meet your needs. Call a few offices and ask the agent questions. How long have they been in the area? How long have they been in sales? What are the steps they take when they are working with a buyer? Make sure their personality and work ethic is compatible with your personality and your needs. If you have a home to sell, and you are making an offer subject to the sale of your home, it pays to use the same agent. They will be motivated to market and sell your home in the time frame required for you to purchase your next home.

An agent can watch the market for the homes that will have a quick sale. Don't miss the bargains because you are trying to do it all yourself. Meet with your agent when you have steps one and two completed. Get to know them. Go over your list of requirements and make sure they understand what type of property you want and your price range.

4. Location, location, location! I can't stress this enough. The location will determine how much you can re-sell your property for, and how fast. Most buyers live in their first two homes an average of seven years. If you buy in a declining neighborhood, you could have a loss when you go to sell your home. Good locations are growing sub-burbs, homes located by a school, homes located in historical neighborhoods. Your agent will know where these are. Don't buy the most expensive home on the block. There is no room for appreciation.

5. Look past the minor flaws. Make sure to let your agent know if you are a do-it-yourself type of person, or if you need everything in order in the home. If you can paint, carpet and make minor repairs or updates, you can save money on the purchase, and increase value quickly. If you have no desire to do anything, make sure your agent knows you want a home that is move-in ready. Always have the major ticket items like the foundation, a furnace, central air, windows, roof and insulation inspected by a general contractor or a certified home inspector. You will have an inspection period and this period is meant for you to find flaws and re-negotiate price. Use that time and pay for the inspection. It will be worth it.

6. Earnest money. The negotiation process can be stressful. When you make an offer, you will want to give the seller "earnest money". This can range from $500 - $5,000 depending on the price of the home. Be prepared to give an earnest money check with the offer. This check is deposited when the offer is accepted and put into a trust account. At the closing, you will have a credit for this money to your side of the closing statement.

7.Drive a hard bargain. If you and your agent have determined a good price range, stand your ground in negotiations. Sometimes the seller is unreasonable so you need to walk away if they won't agree to your top dollar. Have at least two homes selected, your first and second choice. Most markets are buyer's markets. Your agent will know what the top dollar is because they will have researched comparable sales in the area to help you determine what price you should offer.

8. Go through the home at least twice. When you are preparing to make an offer, look for all the flaws that may give you negotiating power or leverage. Your agent should know the comparable sales in the neighborhood and will know what price per square foot the home should sell at. Know the type of loan you have and don't be afraid to ask the seller to pay for closing costs or give you cash back at closing for repairs.

9. Never close your sale on a Monday, if possible. Your loan will be funded on Friday causing you to pay three extra days of interest. Close on a Tuesday through Friday.

Home buying can be a fun, but stressful process. Your agent and your lender are there to work for you. Take time to research lenders and agents to make sure you have one you trust and that knows your needs and wants. Be sure to look over loan proposals carefully for hidden fees and costs. Rely on the professionals to guide you in the home buying process. Look at several homes to get an idea of what is available in your price range and where you may have to compromise because of price. Always do a final walk-through the property 24-48 hours before you are scheduled to close. There could be major issues that weren't addressed or visible the last time you went through the home. Have fun! This is an exciting venture!