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Essential Steps For Buying A Home In 2024

essential tips for buying a home

Essential Steps For Buying A Home In 2024

In order to buy a home in this time of high interest rates and low inventory home buyers need to be five steps ahead of everyone else in order to make sure they get a home that meets their needs.  Proper planning ahead of time can save a lot of buyer heartache and remorse.  This article looks at some of the critical things home buyers need to be doing prior to making an offer to purchase a home.

Boost Your Credit Score

With interest rates being higher than in the recent past, applying for a mortgage after doing everything to boost one’s credit score as much as possible can result in thousands of dollars in savings over the life of the mortgage.  The higher the credit score one has the lower the interest rates the home buyer can get from a lender.  The buyer should pay down high interest rate credit card accounts, pay off loans and other lines of credit prior to applying for a mortgage.  Buyers can do other things to increase their credit score such as increasing credit lines (without increasing the usage of those lines), paying bills on time, disputing errors on ones credit report and more.  Some mortgage lenders offer credit counseling services or a real estate agent can recommend credit counselors who can help guiding on boosting ones credit score.

Real Estate expert Bill Gassett of Maximum Real Estate Exposure provided excellent tips for first-time buyers who may not know precisely what to focus on.
When you have aspirations of buying your first home, one of the things you should focus on is improving your credit scores. There aren't many things that will have more impact on the terms and conditions you receive from a lender than an excellent credit score.
I would also focus on building up your cash reserves. When you become a homeowner, there are always unexpected financial surprises, like the water heater giving out of the central air going sooner than you thought. By having ample money set aside, you will not be put under economic strain and will not have to change your lifestyle.
New home buyers must have a budget and stick to it before, during, and after purchase. Those who do this end up reaping all the benefits that owning a home has to offer.

Research Mortgage Loan Programs

There are different mortgage options available depending on buyer eligibility and include mortgage loan options like Veterans Administration (VA), U.S. Department of Agriculture (USDA), Federal Housing Authority (FHA), Conventional mortgages and more.  Mortgages available from the VA are for eligible active duty, reserve and retired military service members and the benefits can include lower down payments, better interest rates, and more. Mortgage loan programs from the FHA also offer low down payment options as well as more flexibility based on credit score.  By researching and understanding all the mortgage loan options available to a buyer they can get the best loan for them which also can help save quite a bit of money over the term of the loan.

Interview Lenders

In order to get the best options for a mortgage loan the home buyer should be speaking to multiple lenders.  While your local bank lender might look like a great option, until the home buyer compares the different mortgage programs between lenders they will not know.  For lenders to give an accurate mortgage interest rate quote they will also have to pull the buyer’s credit report.  money in jarToo many credit inquiries over time can lower one’s credit score so it is best to wait for this process until one is pretty sure they are ready to buy a house and want to figure out how much home they can afford.  

Not every lender has access and/or knowledge for all mortgage loan programs.  Some lenders specialize in mortgages offered through the VA, FHA or other specific mortgage types.  A home buyer should not get stuck with one mortgage lender due to really liking that lender as if that lender cannot get them a better interest rate due to limits of their bank that will cost the buyer in the long run.  When shopping around the buyer also needs to consider closing costs charged by the lender as well.  Sometimes that low rate can come with hidden costs that are only discovered when one is fully into the house buying process.

Determine Affordability

Just because a lender says a home buyer can get pre-approved for a certain amount of a mortgage does not necessarily mean the buyer should be buying a home in that price range.  The buyer is the one who knows their personal financial situation and how much of a monthly payment they can afford.  While the mortgage payment of principal and interest will stay fixed for the term of the mortgage under a fixed rate mortgage (30 years for example) that does not mean other costs like insurance and taxes will stay the same.  In fact insurance and taxes have been going up recently for many new home buyers which can result in some budget pain if that was not accounted for when buying the home initially.

As a homeowner there is more than just paying for the mortgage, taxes and insurance, the homeowner will also have to pay for maintenance and upkeep of the home.  Letting maintenance issues slide due to lack of funds can lead to an unlivable home down the line when something like a small water leak results in an overgrowth of mold.  Or the furnace cuts out in the coldest month of winter and no funds are available to replace the furnace.  As part of the budgeting process for determining the affordability of a home the home buyer needs to factor in maintenance and repair costs as well.

Luke Skar with Madison Mortgage Guys provided the following story:

The journey to your dream home begins with a single step: preparation. It’s not just about finding a house, it’s about preparing to make it your home.

We worked with a young couple a few years back. They were excited to buy their first home. They fell in love with a charming house at first sight and hastily made an offer, only to realize later that they had stretched their finances too thin. The house needed major repairs they hadn’t budgeted for, and the neighborhood lacked the desired amenities. They ended up selling the house at a loss and learned a hard lesson. When they decided to buy their next home, they took their time. They got pre-approved for a mortgage, researched the neighborhood, and had the home inspected before making an offer. This time, their preparation paid off. They found a house that perfectly fit their needs and budget. Their story serves as a reminder that preparation is not just about avoiding pitfalls, it’s about paving the way to a home that truly enhances your life.

Gather Savings

After researching which is the right mortgage option for the buyer, getting together savings to pay for things like closing costs, down payments, home inspections, a home warranty and more is important.  Depending on the mortgage type the homeowner will have to bring cash to closing to complete the purchase of the home.  Gift money can be used to pay for closing costs and/or the down payment so long as the rules regarding gift money are followed.  The buyer should be consulting with their mortgage lender about gift money rules well in advance of closing to avoid any unexpected surprises that could delay closing.

Interview Home Inspectors and Contractors

Having contractors like the home inspector, HVAC, plumbing, roofing, etc lined up beforehand means less scrambling during the initial period of buying a home.  While a real estate agent can recommend those contractors it is helpful to come up with names independently through one’s own research.  For contractors that work on things like HVAC, plumbing and more those will be long term relationships homeowners need to have to make sure the best qualified person is taking care of issues on a timely basis.

The home inspector is a generalist when it comes to looking at home issues.  They can spot potential issues and then recommend to the buyer that they consult an experienced contractor in that field.  So, for example the home inspector finds potential issues with the HVAC system, they will then recommend the home buyer bring out a HVAC technician to tune up and evaluate the HVAC system.  Home inspectors may have their own referral network when it comes to contractors just as a real man grabbing moneyestate agent should, the home buyer may want to talk with their own network of friends and find contractors that way to avoid any potential conflicts with contractors who feel they now owe a favor to the home inspector or real estate agent for being referred by them,

Interview Real Estate Agents

Interviews of real estate agents can be done in person or done by the home buyer looking online reading reviews and viewing the agents social media and/or blog posts.  Some agents share their knowledge online via blog posts or vlog posts (video posts) which can provide quite a bit of insight into the home buying process and the agents knowledge of that.  Home buyers can also reach out to their personal and professional network to ask about agents who work best for their friends/associates and what they liked about the agent in question.  Real estate agents representing home buyers need to understand the process and be able to explain it to buyers in terms they can understand.  Questions about the home buying process always come up and the real estate agent needs to be available and knowledgeable enough to provide answers to their buyer clients.

Final Thoughts

Buying a home is not as easy as going to a store, picking something out and being on ones way.  By being properly prepared home buyers can start off on the right foot and ensure success.  That proper preparation can also save the home buyer a lot of money over the long term of the loan.

About the author: The above article “Essential Steps For Buying A Home In 2024” was provided by Paul Sian. Paul can be reached at paul@CinciNKYRealEstate.com or by phone at 513-560-8002. If you’re thinking of selling or buying your investment or commercial business property I would love to share my marketing knowledge and expertise to help you.  Contact me today!

I service the following Greater Cincinnati, OH and Northern KY areas: Alexandria, Amberly, Amelia, Anderson Township, Cincinnati, Batavia, Blue Ash, Covington, Edgewood, Florence, Fort Mitchell, Fort Thomas, Hebron, Hyde ParkIndian Hill, Kenwood, Madeira, Mariemont, Milford, Montgomery, Mt. Washington, Newport, Newtown, Norwood, Taylor Mill, Terrace Park, Union Township, and Villa Hills.

ESSENTIAL STEPS FOR BUYING A HOME IN 2024

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