Know before you buy
7 tips for the savvy homebuyer
By Maria Celli
Buying a home can be a daunting endeavor – especially for first-time homebuyers. With interest rates at historic lows, it may make more sense today to invest in a home than to spend money on rent. The following seven tips will help get you on your way to becoming a savvy homebuyer.
Credit is king!
To obtain a mortgage loan for the purchase of a home, a homebuyer must meet credit score requirements. A good initial step is to get a free credit report through AnnualCreditReport.com before going to a lender. Check the report for accuracies and clear up any fraudulent accounts.
The Fair Credit Reporting Act (FCRA) requires each of the credit reporting agencies (Equifax, Experian and TransUnion) to provide you with a free copy of your credit report, at your request, once every 12 months.
Purchasing a home is a long-term commitment
If you are looking to purchase a home, plan on living there for more than a few years. The transaction costs of buying and selling a home far exceed that of renting. A short-term homeowner may run the risk of losing money.
Consider an affordable home
A lender may disclose the monthly mortgage payment that a borrower’s income may qualify for but it is up to the borrower to decide if it’s in his or her level of comfort. Costs of the monthly house payment normally include the mortgage payment, utilities and other costs such as care and maintenance.
Shop around for a lender
It’s important to shop around for the best financing deal – there are a variety of lending options to help finance a home. Shopping around allows a potential homebuyer to compare interest rates, annual percentage rates, fees and down payment options with several lenders. Ask for loan estimate sheets reflecting the loan costs.
Find a lender who offers good customer service and who will answer your questions in a timely manner and in layman’s terms, explain options and provide information about the process. Shopping around helps determine how much home the buyer can finance and helps to identify a realistic price range.
Find a real estate professional
A real estate licensee or realtor helps to locate and show homes within the buyer’s appropriate price range. Once the right home is found, the real estate professional helps in negotiating the purchase. A good real estate professional will help the homebuyer navigate the entire process and alert the buyer of any possible pitfalls throughout the home buying journey.
Ask questions – a lot of questions!
To avoid buyer’s remorse, a consumer must make an informed decision. Don’t get sold! Get educated!
Educate yourself before jumping in. Alaska Housing Finance Corporation is an independent state agency that offers a free 8-hour homebuyer education class that is open to the public. The HomeChoice course covers everything from financing options and credit scores to home inspections and home purchase tips. For more information or to find out when a HomeChoice course is offered in your community, visit ahfc.us/buy/homechoice.