By Julie Yurek
Buying a house can be an uncertain adventure, although rewarding, along the journey of life. Buying a home does not have to be overly complicated if buyers are well informed.
Probably the biggest concern for future homeowners is financing, and the hot question is how much they can afford.
How many have driven past elegant two-story houses, wondering how the occupants afford such a wondrous place?
With many financing options out there today, folks are more likely to be able to afford the house they dream of (see the story on a different page about low interest financing). In addition, there is a thorough home buying seminar available on a regular basis through the Minnesota Housing Finance Association.
Those interested may call McLeod County through Heartland Community Action Agency at 800-992-1710, as well as through the Wright County Community Action at 800-362-3667.
For the prospective buyers' first meeting with a lender, make sure to bring along the following:
· A purchase contract for the house, if available
· Bank account numbers and the address of your bank branch, along with checking and savings account statements for the previous two to three months.
· Pay stubs, W2 withholding forms, tax returns for two years, any other proof of employment and income verification
· Divorce settlement papers, if applicable
· Credit card bills for the past few billing periods, canceled checks for rent or utility bill payments, in order to show payment history and amount of revolving debt
· Information on other consumer debt such as car loans, furniture loans, student loans, and retail/credit cards
· Balance sheet and tax returns, if you are self-employed
· Any gift letters, if you are using a gift from a parent or relative or other organization to help pay the down payment and/or closing costs. This letter simply states that the money is in fact a gift and does not have to be repaid.
Having these items will help speed up the application process.
After the initial meeting with the lender, prospective buyers should have a general idea if they qualify for the size and type of loan they want.
The lender should notify prospective buyers if they qualify in 30 to 60 days. If denied the loan, the lender must explain why.
The lender may then discuss any other options.
Closing costs are important to keep in mind as well. The amount will vary from sale to sale. Ask the lender or agent for a roundabout sum so there is no surprise the day of closing.
It is important to remember that each case is unique. Each applicant is handled differently because each person has some variation in their situations.
Pre-qualifying for a mortgage is a very useful step in home-buying.
This means that the buyer must choose a lender and go through all the steps and paperwork before choosing a house to buy.
The benefits of this are:
· Buyers will clearly know the maximum amount of money they can spend on a house purchase.
· When buyers find the home of their dreams and are making an offer, the seller will consider the offer more seriously, knowing the buyers have already been approved for financing. This is especially helpful if several buyers are interested in the same property, or when time is of concern.
Some of the financing steps can take several days to a couple weeks, so it is best to have this done beforehand, before buyers seriously go house hunting.
Finding an agent
Many people put a lot of thought into a real estate agent when they are selling a home, but not necessarily when buying.
Here are some important issues to think about.
Many home buyers end up with a real estate agent by answering an advertisement. The ad tells only about the house, not the agent.
There are two sides to every sale. The seller's side is represented by the listing agent, and the buyer's side is represented by the selling agent.
Ask real estate agents questions. Have they been in the business for long? Are they full-time agents? How many home sales did they take part in last year? Do they know the area where the buyers are interested in? What was the average sold price of the homes they sold last year?
A real estate agent should be dedicated to helping the buyers find the home they love, and have a willingness to work with them.
Also, ask friends and family for a recommendation.
What to look for
Home buyers look for aspects of a house that fits their needs. A buyer with children will look at a house differently than a single person or a newlywed couple.
However, there are some points that every house should have.
A home is an investment, so one must look at how to buy wisely in order to get a return on that investment.
Location is very important when purchasing a home. It is as important the day the purchase is made as it is the day to be sold. The idea is to buy a home that will appeal to as many potential buyers in the future as possible.
Is it important to you to be near a school or grocery store? Do the buyers want to be on a main road or street or near a park?
Know your needs and wants and what you can and absolutely cannot live with.
Decide between needs and wants. If buyers have a list of your must-haves and can-live-withouts, it will make house hunting easier.
Know how many bathrooms and bedrooms needed. Is there adequate living space for your family? Is there potential for adding on?
Some recommend a professional home inspection be done to seek out any defects or damage on the buyers' behalf, which may cost $200 to $500, which could be considered cheap insurance in the long run.
No house will be perfect. There will be some compromising involved.
A careful and smart choice today can reap many rewards tomorrow.