houserefinancecenter.com Blog

Buying A Home Without Overpaying

December 7th, 2010

Buying a house is very stressful. The stress level is way up there with job interviews, marriage proposals and IRS interrogations. We just can’t afford to make a mistake. However, the process could be easier on our hearts and ulcers if we prepare.

Select a lender and get approved.

We all deal with a bank. But do we really have a relationship with the bank? Not really. People at the bank come and go, and we just say "Hi", "Have a nice day". We do not know the employees’ name and they know nothing about us. So we need to walk into two or three banks and interview the lenders. Ask them what they have to offer you and why they are the best choice for your business.Once you have selected a lender you should ask for a pre-approval letter. The more specific the letter the better. The letter should state the maximum loan you are qualified for based on your income, your debts and your downpayment.

Select a realtor and find a house.

The same process you used in selecting the lender use a similar approach in finding a realtor. Be wary of using a friend’s realtor. What worked for your friend or for a relative might not work for you. You need a buyer’s agent. This is a realtor the finds houses for a buyer. There are realtors that list houses to sell. They work on the other side of the fence and might not be too happy taking a prospect to 20, 30 or 40 houses. They might get impatient and want the buyer to sign a contract after the third house.

Be specific in selecting your home.

Sit with your realtor and make a list of "must haves", "nice to have but can live without" and finally, "no, no, hell no".Must have would be things like the number of bedrooms and bathrooms, or walking distance to a school. If you need 3 bedrooms then it would be a waste of time to look at houses with 2 bedrooms. If the school is 2 miles away then you do not want to look at houses in that community.You realtor should be able to help you obtain some crime reports and statistics for the community you are considering moving into.

If crime is a problem your house value could plummet in a very short time. Your safety and your family’s safety is also at risk.

Get the house inspected and seal the loan.

Once you have selected your house and made the offer, be sure that your realtor protects your interest. Your offer should be subject to a satisfactory house appraisal, a house inspection and termite inspection.At this point your realtor should be trying to get a better price on the house. At the very least, he or she, should ask for new floors, or new carpeting, or new appliances, anything to make you happier.

Now that all the bases are covered and the house is sound structurally and termite free, you have to finalize the loan. Remember, your pre-approval is not a firm commitment from the bank to lend you the money. It only states that you qualify. At this point you need to fight (negotiate) with the lender for the best rate. Don’t feel that you are insulting the loan officer, he or she gets this everyday. It’s expected. If you accept the first rate that is thrown at you, the lender might think at you are a bit odd.

Close the deal.

Your lawyer or closing agent will gather all the documents and close the deal. Your deposit will be put into an escrow account. All the closing costs will be itemized and verified.When all the paperwork is done, you will go the the closing agent’s office sign the documents and get the keys to your house.

Related articles and information by House Refinance Center

Know Your Closing Costs

Buying A House For Cash: Do You Deserve A Discount?

ARMs To Reset: More Defaults And Foreclosures

New Stimulus: Strategic Defaults

FHA Short Refinance

How To Speed Up Your Loan Approval

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Entry Filed under: Housing Inventory