It is a very exciting time for my family. My wife and I are in the process of buying our first home! With the distressed homes available, tax credits, and low mortgage rates, our timing couldn’t be better. But with this excitement, also comes a lot of added stress. But with the proper planning and research, I have found that the home buying process can be made easier. Here are some things my wife and I have learned through this process.
When looking for real estate bargains, you have to be very proactive. You can’t rely on your realtor to do all the searching for you as they often don’t have the time. In my market in northern California, the really good deals on foreclosures all seem to be under contract within a week.
The good news is that you have access to the MLS service just like a realtor would. You can use Realtor.com to do your searching, but I would recommend doing a Google search for “Your Town foreclosures” or “Your Town real estate MLS”. You will find some websites that are updated in real time with the newest listings and foreclosures. Check it every morning and every afternoon and when you see a good deal, call your realtor and try and get in the house to take a look that day. I have found this to be the single best way to find bargains before other prospective buyers do.
Try and get into contract on a home by April 30th. If you can, you will be eligible to receive a $8,000 tax credit if you are a 1st time home buyer, or a $6,500 tax credit if you have owned and lived in your previous home for five consecutive years out of the last eight years. This tax credit may very well get extended as well. Free money, can’t beat that.
Beware, these often become “long sales”. My wife and I found a great home at an amazing price last November that was a short sale and we had our offer accepted by the homeowner who then sent the short sale package off to the bank for their approval. The price seemed to good to be true, and after waiting four months it was indeed to good to be true and the bank decided to take the house to foreclosure. If you are a frugal bargain hunter like me, be careful with short sales. Especially since they take so long and by the time you hear back form the bank, the home could very well have depreciated even more and make your purchase price not such a great deal after all.
Mortgage rates are fantastic right now. Check Bankrate.com to see what rates you would qualify for in your particular area. Also, make sure to get pre-qualified before you start looking for a home. This will save you a lot of headaches down the line. Also, check your credit report and credit score. If your credit score is over 740 you will get the best rates. So if your score is close to that mark, figure out what it would take to get over that number. It is worth waiting a few months to get your credit in order before you start house shopping. This could literally save you $1,000’s of dollars over a 30 year loan.
Points or No Points
That is the question. This one is simple actually. If you plan on living in the home over 5 years, buying down your mortgage rate with points will usually make sense. It typically takes about that long to get back the money it costs to buy a point. Every situation is different, so make sure to do the math and find the break-even point on your particular loan.
Please give me some other home buying tips that I may have missed. I look forward to your comments.
Photo by asianjournalusa.