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The home buying process can be a little bit intimidating. With a glut of homes on the market today, buyers have many choices when selecting a house. However, it is a good idea to do a bit of homework and preparation before starting to look at houses.
Decide Your Budget
Even though home prices have dropped considerably in the past several years, it is still important to decide on a firm budget before looking at potential houses. Take into consideration that in addition to making a payment on your home loan, you will also need to pay for homeowners insurance and property taxes. Additionally, you will have all of the other expenses associated with owning a home, such as maintenance and repair costs.
Part of your budget also needs to include the amount of money you can put down as your down payment. Today, many lenders look for a down payment of at least 10 percent of the loan amount. If you can afford to make a larger down payment, you may be able to get better loan terms. Additionally, since you will be getting a smaller loan, your monthly payments should be lower.
Closing costs are also an expense you need to consider. Sometimes you can negotiate with the seller to cover all or a portion of the closing costs. However, it is a good idea to include these costs as part of your budget. Closing costs generally range from 4 to 6 percent of the sales price of the home, depending on where you live. Closing costs include inspections, appraisals, lender fees, prepaid property tax, insurance and title insurance.
Once you have worked out your home buying budget, stick to it firmly. It can be tempting to look at houses that are outside the scope of your budget, but staying with it will allow you to realistically afford to buy a house.
Consider Using the Services of a Licensed Real Estate Agent
In an attempt to save money selling their home, many homeowners try to sell it themselves. Although this may save money for the seller, it can prove to be a legal nightmare for the buyer. There are several advantages to using a licensed real estate agent for both the buyer and the seller, the most important being the use of sales offer agreements and sales contracts which protect both parties. A sales offer agreement is used to propose an offer to the seller from the buyer. A sales contract agreement is signed when the provisions of the sales offer are met and completes the sale of the house.
A sales offer contains all of the provisions of the sale and outlines the responsibilities of each party. It contains all of the requirements to complete the sale, including the sales price, payment terms and consequences if the house falls out of escrow. For the buyer, it also provides specific protections if problems are discovered with the house after an offer is made and accepted. For both parties, standard sales contracts used by licensed real estate agents contain legally binding language which has been approved your state’s governmental real estate division.
If you choose not to use the services of a licensed real estate agent, it is strongly recommended that you use the services of a real estate attorney to draw up a sales contract before agreeing to purchase a house. You may want to talk to an attorney before looking at houses and have a tentative sales contract written, along with an offer agreement.
Buying a home can be an exciting process. However, before buying a house, it is important to think carefully about how much money you can reasonably afford to spend. Using the services of a licensed real estate agent can provide you with legal protection during the sales process. Once you have completed the purchase of your new home, you can relax and begin to enjoy your new living space.
Author’s bio: Jimy Jones is a blogger for Homeloans.org covering all kinds of tips for buying a new home.