1. GET PRE-APPROVED!
I often get requests to show homes to customers who are not yet pre-approved. Unfortunately, this is like putting the cart ahead of the horse. It is important to be preapproved for two main reasons. 1)You need to understand the numbers and your loan options. How much money down will your purchase require? What will your closing costs be? What will your monthly payments be? And of course, how much can you be approved for? 2)Once you find a home that you are interested in making an offer on, you will need to submit your pre-approval letter along with your offer. Sellers will not entertain offers without this. Unfortunately, in a market where homes are selling quickly, it may be too late for you to first get approved when you find the home of your dreams.
2. GET AN INSURANCE QUOTE!
Insurance is the biggest variable that can affect your monthly payments. It is easy to calculate principal and interest based on a purchase price. It is also relatively easy to estimate property taxes based on your purchase price. Insurance costs can vary greatly even on similarly priced homes based on age of home, age of roof, and hurricane protection. Get an insurance quote as early as possible in the process.
3. ESTIMATE PROPERTY TAXES!
Buyers often ask me how much are the property taxes on a home they are looking at? The fact is that only your lender will look at this number for your loan approval. It is important to understand that your property taxes will most likely be higher than what the current owner is paying. This is due to the home most likely having a Homestead exemption. The property will be reassessed due to the new sale. The county tax assessor’s websites have great tools to help you figure out your estimated property taxes moving forward.
4. USE AN ATTORNEY OR A TITLE COMPANY THAT IS ATTORNEY RUN!
Use an attorney or a title company that is attorney run. There are limitations to what Realtors can advise you on. If you are purchasing in Broward County it is customary that the Buyer selects the title company. If this is the case, then you should not be paying anything extra for attorney representation. In Palm Beach County, the Seller selects the title agent, but also pays for your title insurance so the extra cost of having attorney representation is more than covered by these savings.
5. HAVE A HOME INSPECTION!
Just because a home looks pretty does not mean there are not underlying issues. Other than your general home inspection, you should also have a Wood Destroying Organisms (WDO / Termite) inspection, a Wind Storm Mitigation Report (this is for your insurance company to see if you get any discounts for roof & hurricane protection), a 4 Point Inspection (A/C, Plumbing, Electrical, Roof – Your insurance company will require this on homes 30 years and older). Other types of inspections include Mold testing, Chinese / Defective Drywall may be done if you deem necessary.
6. YOUR INSPECTION PERIOD IS YOUR DUE DILIGENCE PERIOD!
With most AS-IS contracts, this is your one and only chance to cancel the contract for any reason whatsoever. You need to verify if there are any open/expired/or additions that should have been permitted but have not been. It is also your time to get your insurance quote and make sure you are comfortable with what you are paying. After your inspection period expires you may be stuck with all of the above!
7. RESEARCH YOUR SCHOOL DISTRICT!
School Districts have one of the biggest effects on home value. Even if you don’t have kids, it pays to check out a neighborhood’s school district before buying a home, as living in an area with a sought-after school system raises your property value.
8. UNDERSTAND YOUR HOA!
Understand what living in a Homeowners Association (HOA) may mean for you. Reading a big stack of papers may seem like a huge hassle, but carefully reviewing your HOA documents is important if you want to avoid unpleasant surprises down the road.
9. A HIGHER PRICE POINT MIGHT SAVE MONEY OVER TIME!
A higher price point might save money over time. After making interior and exterior renovations, many homeowners find that their budget has been stretched way beyond what they initially wanted to pay for a home. For this reason, it can be smart to adjust your price point a little to help you save money over time. By paying a little more upfront for a home that has all of the upgrades and extras you want, you won’t have to worry about paying for them down the road.
10. DON’T SPEND EVERY PENNY YOU QUALIFY FOR!
Live within your means and understand that while home ownership is a fantastic long term investment, homes do require repairs, improvements, and upgrades over time. These items cost money. Make sure you have adequate reserves for future expenses.