Should I sell or buy myself (FSBO)
DO YOUR HOMEWORK!
Shop around for the best deal on a mortgage that you can find. Online
resources like Lending Tree can be helpful, even if you decide not to go
with any of their lenders, because you can see what sort of financial
products are available and at what interest rates. Your hometown bank is
another potential lender, and if you have a good relationship with your
bank, you might be able to negotiate a more attractive rate. Get your
financial ducks in a row. Go ahead and dig up the last couple of year's tax
forms, recent paycheck stubs, bank statements and personal ID because the
mortgage company and their underwriter will want to look at everything.
SAVE UP!
Come up with as much cash as you can possibly scrape up. Even if you have
enough money in the bank to choke a horse, you'll need more. Closing costs
will land at 3% - 4% of the total cost of your house. Putting the
recommended 20% down payment on you loan will end up lowering your final
cost, and then you can avoid paying monthly for PMI, or "private mortgage
insurance," that allows your mortgage company to breathe easier at night in
case you default on the loan.
UNDERBUY!
When looking for your first home, you'll experience a lot of pressure to buy
as much home as you can afford (and more). You'll be hyped on a home as an
"appreciating asset" and that in a few years the growth of your
real estate
investment will outstrip your equity, yadda yadda yadda. Don't believe the
hype! Forget about the upper-end of your "pre-approval." Find a
house that
you like but that you can afford the monthly payments on. There are scads of
mortgage calculators online (just
Google
"mortgage calculator") where you can plug in the price of the
house that
you're considering along with the interest rate, and you'll come close to
what your monthly payment would look like.
INSPECT!
When you find a
house that
you like (if you haven't done so already), MAKE SURE to have it inspected by
a reputable home inspector. Don't let your
real estate
agent "find" you an inspector. Instead, go to the American Society of Home
Inspectors' web site (www.ashi.org),
and look up a qualified inspector in the area that you're moving to. The
inspector can do a full inspection of the
house and
let you know what kind of shape it's in and what you can expect in the way
of (immediate) future repairs. This will cost you $300 - $400, depending on
the
house, and
it will be worth every penny. DO NOT SKIP THIS STEP! You will pay for it
later if you do!
UNDERBID!
Here's a little trick. If you find a
house that
you REALLY like, put a bid in on it that is about 5% lower than the asking
price, and make your bid contingent on the home inspection, to be completed
within a week. Here's why you do this - first of all, everybody lists their
house at
what they think that its worth, not what it's really worth on the market. If
they want $100k for a house, bid $95k and they'll probably take it. If not,
you can go up to, say $97k for your next bid and negotiate. Remember,
though, that your bid is a binding contract, contingent on your
financing
approval (not the initial "pre-approval" that you have, but the approval
that you will have to get).
ENJOY YOUR NEW HOME!
I know that this is a lot of info to digest, but it's all important. Buying
a home is the biggest hassle that you may ever go through, and it's a major
expense, but there's a certain pride in owning your own home. A man's home
is his castle, indeed...or at least until his wife gets home from work.
If you have any comments or concerns send an email to: wikirealestate@gmail.com