It’s unbelievable to me that it’s almost the 2017 Holiday Season already! Does time seem to be going faster for everyone else, or just me? I guess the silver lining is that on Sunday, November
Ten Tips for Buying a House
CNN Money posted a great article about home buying tips! Consider how these tips apply to home buying in our area! (http://money.cnn.com/magazines/moneymag/money101/lesson8/index.htm)
1. Don't buy if you can't stay put.
Now is a great time to buy real estate, especially in Charleston, SC! The market is improving and your investment could profit you quickly. As the article points out though, you should buy only when you can stay in your home for at least a few years. Because of transaction costs it is usually not profitable to buy a house if you intend to move again in less than 3 years. In short, know your long term plans before you buy.
2. Start by shoring up your credit.
Credit is extremely important when getting a mortgage. Before you start house hunting speak with a lender to see what steps should take to get your individual credit score up. While there is no "quick fix" for restoring bad credit, often there are small things you can do to make a significant positive impact on your credit (like paying off a credit card).
3. Aim for a home you can really afford.
According to the article, the rule of thumb is that you can afford a house that runs about two-and-one-half times your annual salary. In some areas (several of which are in the Charleston area), housing prices dictate that a higher percentage of your income needs to be dedicated to housing. Use a mortgage calculator to determine generally how much home you can afford. A lender will be able to give a detailed explanation of home costs.
4. If you can't put down the usual 20 percent, you may still qualify for a loan.
Low down payments are an option for most people. If you are unable to provide the conventional 20% down, many mortgage options are still available. Options such as VA and FHA loans are popular choices and many private lenders also offer low interest loans with little money down. Just remember that you may need to account for mortgage insurance if you pay a low down payment.
5. Buy in a district with good schools.
In the Charleston area you definitely want to consider school district, whether or not you have school-age children. School districts are a top priority for many buyers so buying a home in a good school district automatically increases your home’s resale value. Berkeley, Dorchester, and Charleston are the main school districts in the Charleston area.
6. Get professional help.
While searching for homes online is easy (and fun!), most buyers still prefer to use a professional real estate agent when buying a property. Look for an exclusive buyer agent who is able to guide you through the negotiation and buying process. Usually your agent is paid a commission by the seller so most likely the professional help will involve no upfront cost to you as the buyer.
7. Choose carefully between points and rate.
You may have the option to pay additional points (a portion of the interest that you pay at closing) in order to get your mortgage at a lower interest rate. Consider whether the lower interest will benefit you most. Usually if you play to stay in the house for a long time it is wise to pay points to have a lower interest rate in the long term.
8. Before house hunting, get pre-approved.
A preapproval is important before you start seriously house hunting. It will save you the grief of looking at homes you can’t really afford and give you more negotiating room when you decide to put in an offer. Preapproval is different from prequalification. Prequalification is a general review of your finances while preapproval is a letter from a lender giving you actual approval for a mortgage of a certain amount.
9. Do your homework before bidding.
Make sure you put in an offer on a home that fits the trends in the area. For example, if most homes sold in the area for 5 percent less than the listing price, you should probably put in an offer about 8-10 percent lower. You want your bid to be competitive but you also want to make sure you are giving yourself negotiation room. Consult your agent to make sure you understand trends in your specific area.
10. Hire a home inspector.
You have probably already thought about a home inspection. It’s likely that you will even have a contingency in your contract that requires an inspection. The important part of the inspection is to choose an experienced inspector familiar with the area. Especially in Charleston, it is extremely important to have an inspector who understands the geography of the land and the implications that has on home construction. You may pay a little more upfront, but you want an exceptional inspector who will point out potentially costly problems for you in the future. Unless you are buying a new home you can expect the inspection report to identify problems. Don’t be immediately alarmed by problems; consider each item individually and consult your agent to see what items you want to include in the negotiation.
Hank Johnson, a graduate of The Citadel, has a proven track record as a CFO, businessman, Entrepreneur and real estate investor. Hank has been active and successful in the Charleston community for ove....
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