1. Don’t buy if you can’t stay
put
If you can’t commit to remaining in one place for at least a
few years, then owning is probably not for you, at least not
yet. With the transaction costs of buying and selling a
home, you may end up losing money if you sell any sooner –
even in a rising market. When prices are falling, it’s an
even worse proposition.
2. Aim for a home you can really
afford
The rule of thumb is that you can buy housing that runs
about two-and-one-half times your annual salary. But you’ll
do better to use one of many calculators available online to
get a better handle on how your income, debts, and expenses
affect what you can afford.
3.
Start by shoring up your credit
Since you most likely will need to get a mortgage to buy a
house, you must make sure your credit history is as clean as
possible. A few months before you start house hunting, get
copies of your credit report. Make sure the facts are
correct, and fix any problems you discover.
4. If you can’t put down the usual 20
percent, you may still qualify for a loan
There are a variety of public and private lenders who, if
you qualify, offer low-interest mortgages that require a
down payment as small as 3 percent of the purchase price.
5. Buy in a district with good
schools
In most areas, this advice applies even if you don’t have
school-age children. Reason: When it comes time to sell,
you’ll learn that strong school districts are a top priority
for many home buyers, thus helping to boost property values.
6. Get professional help
Even though the Internet gives buyers unprecedented access
to home listings, most new buyers (and many more experienced
ones) are better off using a professional agent. Look for an
exclusive buyer agent, if possible, who will have your
interests at heart and can help you with strategies during
the bidding process.
7. Choose carefully between points and
rate
When picking a mortgage, you usually have the option of
paying additional points — a portion of the interest that
you pay at closing — in exchange for a lower interest rate.
If you stay in the house for a long time — say three to five
years or more — it’s usually a better deal to take the
points. The lower interest rate will save you more in the
long run.
8. Before house hunting, get
pre-approved
Getting pre-approved will you save yourself the grief of
looking at houses you can’t afford and put you in a better
position to make a serious offer when you do find the right
house. Not to be confused with pre-qualification, which is
based on a cursory review of your finances, pre-approval
from a lender is based on your actual income, debt and
credit history.
9. Do your homework before bidding
Your opening bid should be based on the sales trend of
similar homes in the neighbourhood. So before making it,
consider sales of similar homes in the last three months. If
homes have recently sold at 5 percent less than the asking
price, you should make a bid that’s about eight to 10
percent lower than what the seller is asking.
10. Hire a home inspector
Sure, your lender will require a home appraisal anyway. But
that’s just the bank’s way of determining whether the house
is worth the price you’ve agreed to pay. Separately, you
should hire your own home inspector, preferably an engineer
with experience in doing home surveys in the area where you
are buying. His or her job will be to point out potential
problems that could require costly repairs down the road.