Top 10 Tips to
Successful Home Buying
Tip #1: Research Is The Key To Discovery
Home sellers won't call you with an offer to buy a maintenance-free home with a wonderful mortgage. You have to find the gems yourself! Only by reading available materials, talking to friends and experts, and spending time looking at different homes, schools, and neighborhoods will you end up with your American dream. Avoid the nightmares by learning how best to buy and maintain a home.
Tip #2: Make A Plan And Get Pre-Qualified
Carefully examine each important decision and think it through. Develop a well organized plan for making your Point Loma home purchase. Focus on the most important factors. Create file folders on house hunting, Point Loma home financing, service providers, etc. Get yourself pre qualified for a loan so you can determine the amount of Point Loma home you can afford. Getting pre qualified also increases your chances of closing a deal, The seller is more likely to accept an already funded offer than one from a Point Loma home buyer who still needs to get a loan. Lenders usually employ the 28% formula (your monthly mortgage must not exceed 28% of your monthly income) in approving your loan. Plan your actions and get pre qualified, this reduces the chance of panic situation and allows you seize opportunity when it is presented. A thorough plan will save both time and money!
Tip #3: Value, Value, Value
It's more important than ever to buy smart. While home prices are down and interest rates are an all time low, it makes more sense than ever to get into the housing market. Homes in Ocean Beach and Point Loma have decreased in value just as the rest of the market has dropped. However, real estate on the Point hasn't taken as hard of a hit as many parts of San Diego County. This sleepy community is always desirable because of it's central location, proximity to Downtown and the airport and the benefit of both bay and ocean life.
Tip #4: Create A Top 10 List of Amenities
When shopping for a home on the Point, list the features (fireplace, fenced-in yard, new appliances, etc.) that are most important to you in deciding on which Point Loma home to buy. Establishing "your criteria" early on will save time shopping for inappropriate Point Loma homes and may keep you from buying a Point Loma home on a whim -- for example, because of a circular stairwell -- that doesn't meet your fundamental requirements. As detailed in Tip #3, your top reason for buying a Point Loma home should be the value you are getting. Some of your top 10 amenities should logically be sacrificed if an incredible value is available.
Tip #5: Fixed vs. Adjustable Rate Mortgages
Which type of loan fits your particular needs? Are you a first Point Loma home buyer or are you moving to a larger Point Loma home? If you're planning to own for a short time, an ARM may be the best type of loan. If you're shopping for your dream home or you plan to raise a family, a fixed rate mortgage may be more suitable for you. If you choose an ARM, the index should be based on the Cost of Funds Index if rates are increasing, and Treasury Bills if they are decreasing. The COFI's are less volatile over time than T-Bills. Find out the what the teaser rate is and what the real rate would be.
Whichever loan you choose, make sure that you scrutinize all the closing costs. If you are required to have a mortgage escrow account and private mortgage insurance, make sure you understand the terms and cancellation procedures. Also, make sure there are no prepayment penalties so that you can utilize an accelerated mortgage plan. A good mortgage reduction plan can save you tens of thousands in interest costs, and shorten your loan term, with only small extra principal payments. If you experience negative changes in your job, health, or marital status, you can revert to the standard payments in your mortgage contract.
Tip #6: Sign A Contract That Protects You
Make sure that the contract you put on a house allows you to arrange financing, inspect the home and negotiate any problems that you uncover. Ensuring that the contract you sign will minimize potential legal battles will let you swim in your new pool with your family and neighbors instead of with the sharks.
Tip #7: Put Yourself In The Seller's Shoes
You are about to make one of the most important decisions that will affect both your life and the life of the seller. If you take time to understand the reasons the seller bought the home, their reasons for selling, and the Point Loma home improvements they have or have not made, you'll be in a better position to evaluate the home and negotiate a better deal. In the end, the home buying process excludes the professionals and comes down to the individuals buying and selling the home. A closer look at the seller may help you in deciding whether and for how much to buy a particular home.
Tip #8: Develop A Mortgage Shopping Chart
One of the biggest decisions to make before putting a contract on a Point Loma home is how to finance the purchase. There are 10,000 lenders competing for your mortgage business. The days of simply walking into the community bank and negotiating with the loan department manager are over. Today, you can apply for a loan over the Internet or even use a mortgage broker to shop for your loan with hundreds of lenders. When choosing a lender, you want to avoid apples to oranges contrasts by comparing fixed rates to fixed rates, not fixed to ARM's. Create a chart that lists different types of loans, fees, and at least five mortgage providers (including a mortgage broker).
Tip #9: Get A Quality Home Inspection
Although it is hard to believe, more people pay for inspections before buying used cars than when making the biggest investment of their lives -- their homes. Paying for a qualified home inspection before you buy a Point Loma home isn't just spending "a little extra" for peace of mind; it's absolutely essential for anyone who doesn't want to spend thousands of dollars for repairs.
Tip#10: Peace of Mind: Home Protection Plans
To protect both yourself as a buyer, and well as the seller, it is a good idea to purchase a home protection plan. What exactly is it? A home warranty, or home protection plan, is a service contract, normally for one year, which protects homeowners against the cost of unexpected repairs or replacement on their major systems and appliances that break down due to normal wear and tear. A negotiable contract between the buyers and sellers which do not overlap or replace homeowner's insurance policy, this type of warranty can save the new homeowner lots of headaches, as well as put seller's fears to rest. The warranty covers mechanical breakdowns, while insurance typically repairs the related damage, for example: if a hot water heater burst and destroyed a wall in your home, the warranty would repair the water heater and your insurance would pay to fix the wall.
Information provided by The American Homeowners Association, Copyright© 2002
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