Brown Ray - Home Buying Kit For Dummies

Home Buying Kit For Dummies, 6th Edition

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Copyright 2016 by Eric Tyson and Ray Brown

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Published simultaneously in Canada

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ISBN 978-1-119-19170-4 (pbk); ISBN 978-1-119-19172-8 (ebk); ISBN 978-1-119-19171-1 (ebk)

Home Buying Kit For Dummies, 6th Edition

by Eric Tyson and Ray Brown

1. Buy a home that comfortably allows you to accomplish your other financial goals. Understand how the proposed home purchase fits into and affects your existing financial situation and goals, especially saving for retirement.
2. Get your personal finances in order before you buy. You should make your saving, investment, and insurance plans before you buy.
3. Mortgage lenders and real estate agents cant tell you how much you can afford to borrow. They can only tell you the maximum that youre eligible to borrow.
4. The best time to think about selling your house is before you buy it. Be sure that the home you buy has features other buyers will find desirable, or you wont be able to get a good price when you sell it.
5. Real estate is a good long-term investment. However, home values go through up periods as well as down periods. If youre a homeowner during most of your adult life, your home should enjoy a healthy appreciation of value.
6. Consider renting if you think youll soon need to move. Given all the costs associated with buying and then selling a home, if you dont expect to hold on to your home for at least three (and preferably five) years, you could very well lose money.
7. Have the courage to be a contrarian. The best time to buy is usually at the bottom of a real estate cycle when fewer people think its a good time to buy. Compare the monthly costs of renting a home to buying it to see whether buying offers a good value.
8. You can easily save thousands of dollars by shopping around for a good mortgage. Money is a commodity, just like toasters and toilet paper.
9. Choose a mortgage that fits your needs and ability to accept risk. Dont take an adjustable-rate mortgage unless you can afford the maximum possible monthly payment and the risk of fluctuating payments.
10. What you dont know is usually what gets you into trouble. Real estate is a team sport. Put the right players on your team and you greatly reduce the likelihood of problems with your purchase.
11. Invest the time to find the best possible real estate agent that you can. A patient, knowledgeable agent can add value to your home-buying transaction. A mediocre or lousy agent can be a liability.
12. Remember that real estate agents, mortgage brokers, and other players only get paid if you buy, and they generally get paid more the more you spend on a home. To protect yourself against these conflicts of interest, get your financial house in order before you start working with these players.
13. Buying a home is an emotional experience for most people. The better job you do of controlling your emotions, the more likely you are to control the transaction and get a good deal.
14. Beware of fake sellers trying to peddle overpriced houses. Learn how to spot counterfeit sellers before you waste your precious time and money on them.
15. Whats it worth? is the most important question to answer when buying a home. Examine sales of comparable homes (a good agent can assist you) to answer this question.
16. There are no absolutes in real estate negotiation. Smart buyers realize that there are times to make a low-ball offer and times to make your first offer your best offer. And remember that everything is negotiable.
17. If the deal youre getting on a home, mortgage, or any other aspect of a home purchase seems too good to be true, it probably is. Find out why the home or mortgage is so cheap or suffer the consequences later.
18. Never buy a pig in a poke. Dont try to save money by skipping inspections. Have the home thoroughly inspected before you buy it. If in doubt, reinspect.
19. Buy the most comprehensive homeowners insurance policy you can. Make sure that you have coverage for catastrophic risks, such as earthquakes or floods, that may occur in your area.
20. Dont let unexpected closing costs sabotage you. Ensure that you have enough cash to buy the home by estimating in advance all the costs you must pay at the time of closing, including moving expenses, insurance premiums, loan fees, and property taxes.

To calculate your monthly mortgage payment, simply multiply the relevant number from the table below by the size of your mortgage expressed in (divided by) thousands of dollars. For example, on a 30-year mortgage of $125,000 at 7 percent, you multiply 125 by 7.17 (from the table) to come up with an $896.25 monthly payment.