Purchasing a home isn’t just about French doors and big backyards
by Nancy Mattia
CTW Features
For anyone planning to plunge into the world of home buying, there are a few truths you’ve probably heard about: Spend as much as you can on a down payment to lower your monthly mortgage payment and carefully compare mortgage rates. But there are some things essential to the process that may surprise you. We’ve outlined the most jarring below.
1. Make-or-break credit
If that missed credit card payment was reported to a credit bureau, it’ll lower your credit score, one of the tools mortgage lenders use to decide whether or not to loan you money and at what rate. “Your credit rating tells the mortgage company if a person is capable of paying off his monthly obligations,” says Ruth Henegan, a sales associate with Coldwell Banker, in Coral Springs, Florida. If you have a credit score of 740 or higher, most lenders will offer their best interest rates; if it’s less than 620, it’ll be much more difficult to obtain a mortgage.
2. Before buying, think about selling
Resale value is important even if you’re not planning on moving anytime soon. Focus your search on properties near well-regarded schools, close to shopping, and surrounded by homes of equal value or more. Buying a home in a struggling community or congested neighborhood, or one that has many rental properties, will likely devalue it. “You also don’t want to be the smallest or largest home in a community,” Henegan says. “Being somewhere in the middle will increase your value by the square foot because you’re surrounded by homes of greater value.”
3. Be wish-list flexible
The longer the list, the less likely all those needs will be met. Prioritizing is a realistic way of getting the two or three features – like a swimming pool or a double-car garage – that are most important to you. “The amount you can afford will determine how many things on your wish list will be met,” Henegan says.
4. You’ll get emotional
Maybe a house with a third bedroom was at the top of your list, but your real-estate agent takes you to a two-bedroom with a wraparound porch, and you instantly fall in love. Before long, you’ve talked yourself out of the extra bedroom because you can’t stop thinking about the porch. “I had a client who I showed a house on a lake to, and it reminded her of where she grew up,” Henegan says. The buyer bought the house because it gave her a good feeling even though it didn’t have hardwood floors, her top priority.
5. Convoluted contracts
Words and phrases like “escrow,” “title insurance” and “earnest money deposit” aren’t in most people’s every-day vocabulary, but the contract you sign for a house will be full of such baffling terms. “If something isn’t clear, the buyer should ask his agent or mortgage processor to explain,” Henegan says.
6. Fees, fees, fees
Once a seller agrees to sell you his house, you’ll need a home inspection, which typically ranges from $300 to $500, according to the U.S. Department of Housing and Urban Development. Closing costs also don’t come cheap – typically, they’re two to five percent of the home’s purchase price, notes Zillow, the online real-estate marketplace.
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