If you’re like most people, the decision to buy
a home involves a number of stresses and
strains. And even experienced homebuyers
make costly mistakes that can easily be
avoided. That’s why I’ve identified the 8 best
“secrets” to find the right home at the right
price, and get the right financing:
Secret #1: Understand What You NEED
Analyze your basic needs before you even
start looking so you don’t buy the wrong
home:
1. General price range
2. Approximate size (in sq. footage)
3. General location, area or subdivision
4. Number of bedrooms
5. Number of bathrooms
6. Style and layout of home
7. School requirements or districts
Secret #2: Understand What You WANT
Look at your present home and write down
what you like and what you dislike. From
your list of “likes,” list out the features you
want, then the benefits for each feature. If
you’re part of a couple, you and your spouse
should rank each feature in terms of
importance. Ranking helps you set priorities
as a couple and eliminate homes out of your
price range.
Secret #3: Understand How Much Home
You Can Afford
Bankers and mortgage lenders use two guides
to determine how much loan you can afford:
Payment-To-Income Ratio. This compares
your income to the mortgage payment you’re
considering. The “payment” is the mortgage
payment (principal + interest) plus property
taxes and insurance (PITI) Debt-To-Income Ratio. This refers to all
your major monthly financial obligations,
including car and credit card payments and
outstanding debts. Your lender will compare
your total debt to your ability to make current
payments with your new home loan added
into the equation.
Here’s the key: since each mortgage
company sets different limits on your debt-toincome ratio, you need to find a lender who is
motivated to loan you the money.
Secret #4: Save A Bundle When Financing
Your ability to afford a home will be related
to:
1. The price
2. Your down payment, and the amount you
will finance
3. The interest rate and points of your loan
4. The term of your loan: 15-year, 30-year
5. The type of your loan. Fixed vs. variable
rates are common but there are many loan
packages to choose from.
To shop for the best financing, do your
homework. Study each of these items and the
relationship between them so you can
understand what your mortgage lender is
talking about. Knowing these specifics will
help you choose the loan that will be the best
deal for your situation.
Secret #5: Be Financially Prepared
Before you start looking for a home
1. Find a MOTIVATED lender. Ask a
REALTOR® to refer one or two reputable
lenders to you. The lender will usually give
you better service because they want to keep
getting referrals.
2. Get pre-APPROVED not just prequalified. You’ll have more power to
negotiate the price and terms you want
because sellers know you can close on the
transaction.
3. Have deposit funds available
immediately. Write a check to your broker or
title company for 3 percent of the highest
price you’ve been approved for with
financing. A trustworthy REALTOR® can
hold it un-cashed, so you can demonstrate that
funds are ready and gain a competitive
advantage if the seller gets multiple offers
Secret #6: How You Evaluate Homes Will
Save You Thousands of $$$ + Heartaches!
Ask a knowledgeable REALTOR® for a
“total market overview” not just the market
analysis of the particular area where you want
to live.
Then, as you start looking at specific homes,
these things will help you determine if the ome is a good investment:
1. Location. Buy the midrange home in the
best neighborhood you can afford, which will
appreciate faster.
2. Lot siting. Look at where the home’s lot
is located in the subdivision. Is it private or
located on a busy street?
3. Home siting. Did the builder use the best
features of the site?
Secret #7: Save Thousands of $$$ Writing
Your Offer And Negotiating your Deal
Never tell the seller or their agent why you
need to buy or if you like their home because
they’ll use this information against you to get
a higher price. That’s why it’s best to have a
skilled REALTOR® prepare an offer after
you carefully considering the following:
1. The active listings in the area. Is the home
you want comparable?
2. The average selling price compared to the
listing price of homes that have sold.
3. A visit to other homes for sale in the area.
How do they compare with your choice?
4. Average market times for homes in the
area. If they’re long, you may have more
negotiating room
Secret #8: Use A BUYER’S REPRESENTATIVE!
The seller’s agent does not represent your financial interests. Create a “buyer’s representation” with a
REALTOR® so you have someone on your side working to negotiate the best price. This won’t cost you
a nickel because it’s paid out of the seller’s commission.
