1. Find a home you can REALLY afford.
To find out what you can a afford in a new home, check out the various mortgage calculators that are available online and even can be downloaded as apps on your Smart Phone. The general rule of thumb is to buy a home that is about 2 ½ times your annual salary.
2. Work on your credit.
More likely than not, you will need to obtain a mortgage to buy a new home. So, a few months before you start house hunting, get copies of your credit report and make sure the facts are correct. This allows you time to fix any discrepancies you discover and allows you to sure your credit history is as clean as possible.
3. Get pre-approved BEFORE you house hunt.
Not only will getting pre-approved before you begin your house hunt, show you what price range you can qualify for, but it will also place you in a better position to make a serious offer when you do find the right home. Pre-approval (unlike pre-qualification, which is based on a brief review of your finances) is based on your actual income, debt and credit history.
4. Don’t have the down payment… don’t sweat!
If you cannot put down the usual 20%, you may still be able to qualify for a home loan. There are several government mortgage programs that will pay your down payment for you. Check with your local lender to see what programs you qualify for. Not to mention, during these tough economic times, some lenders offer low-interest mortgages that require a down payment as small as 3% of the purchase price of the home!
5. Look for a home within great school districts.
This advice is not just for home buyers with children. Why? If you do not have school-age children and it comes time to sell, you'll learn that having a home in a strong school district boosts resale property value.
6. Commitment to the community.
If you cannot commit to stay in one place for at least 3 years, then owning property may not be for you. With the high costs of buying and selling a home, you can end up losing money if you sell your home within two years of purchase, even in a rising market.
7. Points vs. Rate
When picking a mortgage, you will have the option of paying either additional points (a portion of the interest that you pay at closing) in exchange for gaining a lower interest rate. If you are planning to stay in the home for an extended period, three to five plus years, it is usually a better arrangement to take the points.
8. Do your homework before placing a down payment.
Make sure you have basic knowledge of the sales trends for similar neighborhoods in the area. Consider sales of similar homes in the last three months to make sure you are paying a fair price.
Ok this tip for buying a new home in the New Year is an obvious one, however it is also one of the most important. Make sure you look for a new home that is near shopping, freeways, and the grocery store.
10. Have the home inspected.
You should hire your own home inspector that has experience inspecting homes in the area where you are buying. The home inspector will point out potential problems that could require costly repairs down the road. Knowing any potential problems before you buy a home will allow you to make a smart investment.