Home Buyer Tips

1. Find out what your price range is before you see a lender. A general rule of thumb is that you can afford a house that is two and 1/2 times what your yearly net income is. This is of course going to differ according to your credit qualifications.
2. Make sure that you have enough money in the bank. Even if you do an FHA Loan which only requires 3% down, you are going to need at least another 2% for various closing costs.
3. Read the papers and listen for ads regarding interest rates.  Not all mortgage companies give the same rates.  If you already have an agent, talk to him/her and see if they work with a broker who may be able to get you a decent interest rate.
4. If you can, get pre-qualified for a loan. This gives you, the buyer, a lot more leverage when it comes to negotiating a price on a home. You will also find that some people will sign a contract with you for less than with other people for more just because you are pre-approved.
5. Once you have loan commitment, lock down your interest rates as soon as possible. Generally speaking, interest rates will slowly go up, and unless your lender thinks that the rates are going to start going down before you close, lock into an interest rate quickly.
6. Choose your agent wisely. Many agents will want you to sign an agent contract for 60+ days so that you can only work with them. They may say that they have to, to be able to represent you, so that they can push you into this. If you want to try out an agent and they insist on a contract, sign a contract for two weeks. This gives them two weeks to show you what they got without you making a long term commitment.
7. See if you can get the seller to pay any of your closing costs. In some cases you can get the seller to agree to pay a percentage of the price of the house towards closing costs. This is good if you are afraid that you will not have enough money to be able to close. This can be written into the contract.
8. DO HAVE AN INSPECTION. This is one of the most important things that you can do. This will protect you, and can give you an out of the contract if there is a major problem with the house. Also include on the contract that the house must pass inspection.
9. Be prepared. I know this sounds general and lame, but you will probably get calls out of the blue stating that your lender needs more bank statements or some sort of verification. This is their way of covering their ass, and is a big pain in the ass for you. You may want to start a file for buying a house and keep copies of your bank statements and income tax returns with you.
10. If interest rates are high, you may want to consider an ARM loan. Most ARM loans start rather low in regards to the interest rate and can only go up a maximum of 1 percent a year. Generally speaking, ARM loans can get you started at a lower interest rate and after two or three years on it, you can refinance on to a fixed interest rate when the time is right.
11. When looking for financing, ask everyone you know who has recently purchased. Sometimes a broker, Credit Union, or small finance company can get you a better interest rate than a bank or the larger finance companies. With my own personal experience and those of my friends and relatives, I have found that if you go with a smaller company or broker they generally give better service, but this is not always the case.
12. Choose your loan type wisely.  Some lenders will offer 107% or 103% loans so there is no money out of pocket.  The problem with this is, that you will being paying on the loan for at least 5 years before you start paying on the principal.    If you cannot put down 20% for a conventional loan, you can go with an FHA loan, but remember you will have the added costs of a monthly HUD payment and mortgage insurance which is included in your monthly mortgage payment.
13. If you are handy around the house and have the time, you may want to purchase a fixer-upper.  If you can find a house that needs work, but is livable, you may be able to get a really good price on it and fix it up as you have the money to do so.  The advantage with this is that when you go to sell, the house is worth more now than when you bought it, so you will have increased your equity, making it easier to get your next home loan.
14. Make sure that you have extra money in the bank for those move in expenses.  There are always things that you do not think of that you will have to purchase (curtains, refrigerator, stove, movers, etc.).  If you can, you may be able to get some items included in the sale of the house and start being friendly with that acquaintance that owns a truck.  It could save you a lot of money up front.