Tips and Tricks to Buying a Home
It’s a big decision! We are here to help you.
Thinking about buying a home? This is a very big life-decision but one that can be rewarding not only as a place to create and build memories but also as a place to help create wealth for your family. Below are some tips of the trade to consider before you start the home buying process.
Buying a home takes preparation, saving and sacrifice but, we believe, is well worth it in the end. There are several advantages to owning a home but there are some disadvantages as well. Be sure you access your personal situation to make a wise decision.
A home can be a great investment! Here are several financial advantages to owning your home:
- Tax benefits: mortgage interest deduction and no tax on gains (limitations apply, check with your accountant)
- Increase equity through appreciation and loan amortization
- Leverage: take advantage of buying a large investment with a relatively low down-payment.
- Lowest interest rate environment in history
It’s not all sunshine and flowers. Here are a couple of disadvantages to owning your home:
- The housing market fluctuations and liquidity. A home is not a liquid asset like a stock and is not easily disposed of during a down-market.
- Maintenance. Like a car, a home needs maintenance. There is always the chance for a large ticket repair such as replacing a furnace, roof or a structural issue can be costly. It’s always good to know what you’re getting into before you buy so be sure to get an inspection before purchasing a home!
Pause before making major financial decisions. Before you start the home buying process try to avoid making large purchases, changing jobs, taking out a new loan or an additional credit card and making large deposits outside of the norm. This will help you in the loan process when you need to present your financial statements to the lender.
Be prepared. Preparation is everything and will save you a lot of time and hassle throughout the home buying process. Before buying a home you should save money for a down payment and clean up your credit history including paying off debt and making timely payments.
Get documents in order. Your loan provider will need your last two years’ worth of tax returns, W-2, recent paystub and bank account balances.
Talk to a lender. A qualified lender will help assess your credit history, credit score and income to determine how much money you may qualify to purchase your home. A pre-approval letter from a lender demonstrates that you are a credible buyer and provides information on down payment required, interest rate, an estimate on costs and fees and monthly payment. This information is crucial in helping you to assess how much you can afford and the costs involved.
Decide which type of loan is best for you. There are two different loan products — conventional and government-insured.
- Conventional Loan: Low down payment options for buyers within low-moderate income.
- Government-Insured Loan: FHA and USDA
Pick the Right Realtor. A good Realtor is a market expert who will explain the ins and outs of the process. Whether on the buying or selling side of the transaction, a Realtor is looking out for your best interest. A Realtor’s commission is typically split between the buyer and seller’s Realtors and is paid by the seller. A good Realtor should be a local market expert. He or she will be the main contact for you and will help refer you to experienced lenders, inspectors, insurance agents and title agents.
Set expectations. Real estate is about compromise. What are a few compromises that you are willing to make or not willing to make related to price, size, location and other features of a home? Try your best to take the emotion out of buying/selling and understand the potential for re-sale value when on the buyer’s side.
Due Diligence. Your Realtor should help you through the negotiation process of contingencies for a home inspection, appraisal and financing.
With any major decision, there are pros and cons. Make sure to educate yourself on the process of buying a home and homeownership before making the exciting decision to purchase a home. A great resource to have when beginning this process is to have a great Realtor who knows the market and who can point you to the right resources within the area. Remember, a great Realtor has your back. He or she is looking out for you and wants you to be satisfied with your decision.
If you are looking for local experts within Central Ohio, our CASTO Realty Group team of experts is here to help you every step of the way. If you are looking to just dip your toe into what it may look like to purchase a home, contact us today! Buying a home can be a tedious process but we love to help our clients every step of the way. You’re not alone. Contact the CASTO Realty Group by email or call (614) 744-2098.
Thank you for considering CASTO for all of your residential and commercial real estate needs. Please fill out the contact form and a CASTO team member will respond to you as soon as possible.