Purchasing a Home in an Uncertain Market
Many things have changed in the world of home buying in the last few months. If you know someone who wants to buy a home, please share this with them. The IMPACT! HomeOwnership Center provides home buyers with the up-to-date information they need to make wise choices and avoid scams and rip-offs that are commonplace today.
How you buy your home is very important to your financial future. Learn about the three most important factors in homeownership and wealth creation: how much you PAY for your home, how you FINANCE your home, and how much it costs to OPERATE your home.
A few things to keep in mind as you go house hunting this year:
It is a “buyer’s market” but buyer beware. Yes, there are more homes on the market – some due to foreclosure or financial distress of the owner. Home builders and homeowners are competing with bank foreclosures and investors who are looking to sell. Why “buyer beware”? You cannot trust what people tell you. Always verify with outside sources. Insist on an impartial home inspection. Look for comparable values from sources other than the listing agent. Talk to neighbors on the street.
Unless you have a “buyer’s broker” agreement with your real estate professional, he or she legally looks after the best interest of the SELLER. There is nothing dishonest here, but even if they show you many homes, unless you have a written agreement, they are bound to negotiate in the best interest of the seller.
Know what you can comfortably afford and don’t “buy up.” Don’t rely on a lender to tell you how much house you can buy. The lender calculations don’t include all your real monthly expenses (like gas for the car, child care, summer camp, utilities – glamorous real life expenses). Your first house need not be your dream home. You will get it if you plan well.
Pay for a home inspection by an inspector YOU select. Attend the home inspection so the inspector can educate you about the home you are interested in. You will learn about the current condition of the home and what type of repairs you should plan for over time. Don’t rely on an inspection the seller offers to share with you. If you decide NOT to purchase the home, the inspection cost will be far cheaper than committing to a home that isn’t right for you.
Borrower beware. Don’t be tempted to buy the more expensive home because a loan officer says they can “get you in with no money down.” The mortgage industry has changed significantly over the last year. Many sub-prime lenders have gone out of business as the “exotic mortgages” have come home to roost. “Exotic” is the nice way of referring to interest-only adjustable rate loans, Option ARMs (where you pay what you feel like paying each month and end up owing the lender more than the house is worth), and other loans that enabled people to purchase more home than they could really afford. Lenders are becoming rational again, which will bring the loan amount you “qualify for” more in line with what you can actually afford. What a concept!
The IMPACT! HomeOwnership Center offers a series of workshops and classes through our Home Investment Academy to help people build their wealth through home ownership. We also have certified housing planners that can help you with credit and budgeting issues and review your documents to get that “2nd opinion.”
