Buying a home is the ultimate dream of perhaps everybody in the world. However, this is not an easy undertaking, unless you are a millionaire who can spend and lose money if a mistake was made. Buying a home requires a lot of painstaking tasks to be done and this is a journey, which, when completed, will result to a very rewarding experience. Considering that you may not be an expert, we will be discussing the right people to work with before you buy your own house. However, let us first talk about the basics of buying real estate.
How Much Can You Afford?
So many people fall victim to seemingly low prices of mortgages but they do not realize that all these loans will pile up and soon, they will be heavily in debt and will have no choice but to sell the house. Before you can buy a house, you need upfront money which will be used as downpayment or reservation fee. Next, you will need funds to pay for the home.
To determine how much you can afford, sum up all the amount of money that you already have and add the amount of money you can spare on a monthly basis for your mortgage. This is what you can afford.
Never borrow money for your downpayment and at the same time, borrow for your mortgage. Before you realize, you will soon be heavily in debt. The downpayment money to use should be money that is already available. This should be your money that came from your savings. It is also not wise to spend your entire savings for the downpayment because you will later on need money for other stuff, like paying the team of people who will work with you.
As a general rule, the cost of the house should not be more than three times the amount of your yearly income. This also applies if you have a spouse. Your combined net income in one year multiplied by three years will give you a rough estimate on how much you can afford.
Your Real Estate Team
It is not advisable that you make decisions on your own. Always work with experts who will provide you the right services for this investment. You will need the expertise of a real estate agent, a lawyer, an appraiser, and a home inspector. Below we will discuss the role of each person so you will have an idea what they do.
The Real Estate Agent
Real estate agents are responsible for finding the house you want based on your specifications and budget. There are things to consider when you are choosing a real estate agent. Most real estate agents are normally seen in open houses. Ensure that you at least know someone who has worked with that agent. Feedback is important because these people will tell you their own experience upon working with the agent.
You should also ensure that the agent you get has enough time for you and that he is hard-working. Good real estate agents should have the motivation to close a sale. Real estate agents who pass you to their assistants are not good picks. They should take care of you personally and responsibly.
Knowledge is also important. Agents should be able to answer your questions about mortgage and paperwork. The agent should be able to clearly define how much you need to shell out and how much you will have to pay for the amortization.
Lawyers are there to protect your assets and financial interests. Without lawyers, you may fall victim to swindlers who show you document after document of liability and contracts. Find good lawyers who will explain in detail the contents stipulated in the contract. Good lawyers will also tell you your rights as a buyer and owner of the house.
When buying a home, the lawyer should provide you the steps to take from signing off a deal to the very last steps of transferring the title deed to your name. It is important that you understand the terms and conditions of the sale so you are guided accordingly.
The Appraiser and the Home Inspector
These two people work together. The appraiser’s role is to determine whether the price is right or too steep. The appraiser considers the age of the building, location, and the current market value of properties. The appraiser will tell you if the house for sale is a good deal or not. They know whether the house will appreciate or depreciate in value in the years to come.
On the other hand, the home inspector will check for damages in the house; he will give you an estimate of how much you need to shell out for needed repairs. A good home inspector must at least have a background on engineering or architecture. Home inspectors will check the physical nitty-gritty of the house, so to speak.
There you have it. These four people are very valuable when buying a home. They will be your guide to successful home ownership. Sometimes, a single person may be an expert in several fields and finding a person of this variety is a great deal since you will be paying for the services at a cheaper price.
For example, an appraiser may also be a home inspector at the same time. The amount he will charge for his services will be lesser compared to paying two separate individuals offering different services. Without a strong team such as this, you are susceptible to fraud and getting ripped off. Some deals may sound topnotch but you might realize later on that you are spending more than what you can afford and you are getting less than what you paid for.