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Top 5 Real Estate Buying Tips

So you want to buy a property? Maybe a house, townhouse, apartment, or condominium - it all sounds exciting! I believe that the journey of buying a property should be a positive experience and that journey starts with you and what you need in order to make it a memorable moment in your life. No matter what type of property you are seeking to purchase, there are some important steps to take into consideration for a successful purchase.

Tip One

Do Your Research - and Educate Yourself! 

Many people jump right in and start looking for houses in desirable neighborhoods and forget the important leg work that is needed to achieve home ownership. Besides having your finances in good order, one of the most important factors while researching and educating yourself is your credit score and how your FICO score can affect your borrowing power.  Do you know your credit score? 

Check Your Credit Score

When it comes to conventional loan requirements, typically a credit score of 620 or higher is what lenders are looking for. Typically, the higher your credit score, the lower the rate you will receive on your mortgage. 

A score below 620 becomes more difficult for lenders to approve your loan or may be required to offer you a higher interest rate, which can result in higher monthly payments. If your credit score isn't the best, don't feel defeated, there are ways you can improve it. Having your finances in order is the first step to an easier approval process, as well as a better loan rate when buying property.

You are entitled to a free credit report from all three major credit reporting agencies once a year. So be sure to take advantage of that and avoid paying fees. Once you know your score, you can assess your options for a conventional or government-backed loan.  

Tip Two

Don't Skip The Preapproval - Know what you can afford!

You may be thinking, can you skip this step? Technically, yes, there is no law or regulation requiring you to get pre-approved. However, it’s in your best interest to get pre-approved. It doesn’t take long, and it comes with several benefits such as knowing how much you qualify for, it shows sellers you are serious and ready, and it helps the closing process move along faster. 

1. Knowing how much you qualify to borrow

Without a pre-approval, you could be looking at homes that are out of your price range. Knowing how much money a lender will loan you for your mortgage is key and helps you afford heartache. It’s better to know upfront how much you qualify to borrow so you can look in the correct price range. Here are some insightful steps you can take to Get Pre-Qualified

2. Presenting a stronger offer 

Being pre-approved assures the sellers that you will be able to secure the funding to close the deal if they accept your offer. Sellers rarely have interest in an offer from an unqualified buyer. 

3. Closing on your new home more quickly

The closing process of buying a home can take time. However, getting pre-approved means one less step in the closing process once your new home is under contract. 

Make sure you have funds for Closing Costs

That's right, it's not just the downpayment you will need to come up with, you will need to take into consideration the fees associated with the closing of your purchase. Closing costs are the fees paid by the buyer and the seller when a home is sold.

You won't be able to determine your exact closing costs until you have a home in mind. This is because many of the fees are dependent on the specific home. For example, HOA fees vary from home to home. According to"In Florida, the average closing costs come to approximately 1.98% of the home purchase price. So, if you take out a mortgage worth $200,000 to purchase a home, you'll pay roughly $3,900 in closing costs."

Tip Three

Have A Downpayment - show that you have some skin in the game!

The average down payment varies significantly based on different factors and borrower profiles. Lenders take into account if you are a first-time home buyer, a repeat buyer, the loan size, your FICO credit score, and your age to name a few.

A downpayment is the percentage of your home’s purchase price that you pay upfront. To get the best loan terms you will want to put down 20% or more. However, 20% can be a lot for people to come up with, and let's not forget about closing costs, which can add up. It is a good goal to have 20% down, but it is neither necessary nor realistic for many buyers, given home prices in many markets.

Let's take a look at the various options you can consider:

Conventional loans require 20% down or paying PMI until the loan-to-value ratio is below 80%. For those that qualify, Government loans from programs like those listed below have more flexible down payment options and less strict credit requirements than conventional loans.

If you are a first-time homebuyer Federal Housing Administration (FHA) loans offer loans with a down payment as low as 3.5%. The FHA focuses on first-time home buyers and those with lower incomes. 

The U.S. Department of Veteran’s Affairs offers VA loans  with little or no down payment to current and retired military members.

Families and individuals looking to buy a house in rural areas will want to consider applying for a USDA home loan.  The USDA home loan program has an income limit and requires no down payment.

Freddie Mac and Fannie Mae offer Home Ready/Home Possible loans to low and moderate-income families making less than 80% of the area median income. The down payment is as low as 3% and reduced mortgage insurance is possible with 10% down.

Having a downpayment may be holding you back from buying a home. However, as I shared in step one - do your research, there are programs available that are administered by local nonprofits and other state organizations to help fund the down payment.  

Tip Four

Get to know the neighborhood 

Now that you have gotten your finances in good order and have that pre-approval in your hand, you will want to start looking for homes in the best neighborhoods you can afford.  That means becoming an investigator before buying a house. Here are my top ten MUSTS when considering buying in a new neighborhood. 

Crime Rate

Sex Offender Registry 

Neighbors & Neighborhood Amenities 

Traditional Neighborhood Development (TND)

School District

Tip Five

Work With A Professional Realtor®

As an ethical, honest, and reliable Realtor®, my goal is to guide you through the home search with an unbiased eye, help you meet your buying objectives while staying within your budget, and assist you with questions you have about local amenities, utilities, zoning rules, contractors, and more. 

Buying a home is a big undertaking. There are many emotions that come up during the process, and having a good Realtor® who is invested in assisting you through the home buying process is important. It can greatly help you avoid the pitfalls and have you in the home you love successfully.  


Posted by Didiayer Snyder on
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