The Truth About Home Ownership
Everybody wants to buy the perfect home. It just really chafes at the soul when you have to pay rent every month. You know your money isn’t really doing anything except buying time. When you think about all the hard work you probably did to obtain that money it is maddening to just hand it off to someone. But at the same time many people have no idea of what it means to own their own home. When you buy a home, it certainly isn’t just a simple purchase. We will break it down into a series of tasks so that it can serve as the basis for a checklist.
Task 1: Save Your Money
This one is fairly obvious. You will need a good chunk of money saved before you can progress to the next step. The difficult thing at this point is to determine exactly how much money you need to save. The best way to arrive at your estimate is to start looking at all kinds of “home for sale” listings. Look specifically for homes that you think you might consider buying. This will give you a good idea of the price range for homes in your area so that you can determine how much money you will need. Bear in mind that there will be additional expenses, so cushion your numbers accordingly. You will not be able to arrive at a final figure right now so just do the best you can.
Task 2: Check Your Credit
You will almost certainly have to borrow money in order to buy your home. Unless you are able to save up for the entire cost of the home this will be a necessity. This means that your credit score will come into play, so find out exactly what it says. This will give you a good idea of how much money you will be able to borrow.
Task 3: Getting The Mortgage
Start by talking to your banker about a mortgage. They will direct you accordingly and if they do not, you should consider switching banks. If you don’t know, a mortgage is basically a lien. This means that they loan you the money to buy your home, and you pay it back in monthly installments until the entire balance is paid. If you don’t pay, they retain possession of the property and all monies you have paid become forfeit. This is where the risk lies, so make sure that you don’t borrow more than you can pay back.
Task 4: Find A Real Estate Agent
Now that you know how much money you can borrow, you will be able to figure out a more exact price range. However, you will still need the services of a professional Realtor to find the right home and close the deal. You could just do it the old fashioned way and drive around certain areas looking for signs that say “for sale”, but random actions produce random results. Besides, there are certain legal parameters that require a licensed agent. Your mortgage banker might be able to recommend a good agent. It should be noted that as the buyer, you do not have to pay for the services of an agent. Those who wish to sell a home are the ones who compensate the agent via commission.
Task 5: Map Out Your Possibilities
You can begin by calling real estate companies that operate in the desired area. A few discussions with them (take good notes!) will give you some ideas about what is available and about pricing. You will want to make appointments to personally check out your “possibles” for a more hands-on evaluation. When you have found a home that you really like, it is recommended to pay a little bit for a home inspection. This will tell you if the property is in need of repairs. It’s also not a bad idea to talk with the locals whenever possible.
Task 6: Negotiate The Price
This is where your agent can be very helpful. Their job is to negotiate a price that is acceptable to both you and the seller. At the outset, your agent will work with you to decide on an initial offer. From there, the seller will either accept the offer or propose a counter-offer. The process goes back and forth like this until a price is agreed and the sale is closed.
Task 7: Insurance and Utilities
Having officially bought your home, you will now need homeowner’s insurance. The process of setting this up is fairly straightforward. Simply call your insurance company and listen to their sales pitch. If you don’t like it, call another company and see what they offer. The laws and codes in your area may also require additional inspections and/or taxes to be paid for. Talk with your agent and other qualified professionals about the laws in your area so that you can get a heads-up on any additional expenses.