6 Ways to Avoid Goofing up the Purchase of a Home

Buying a home is a long process full of stumbles that can set back your goals of owning property. The loan process can be trying on your patience, especially if you have less than stellar credit. That’s also not counting things that can go wrong during inspection, and the inevitable cash buyers who will outbid you.

There are also endless costs. There are costs for running your credit, costs to get the home inspected, and costs to get the loan processed. Most of these costs are wrapped up in closing, but variables in your loan can change right up to the days before your transaction is completed.

This is not to discourage first time home buyers from house hunting. In fact, since every transaction is different, there are a ton of ways that things can go wrong when you’re buying a home. These tips are offered in the hopes of easing your real estate transactions, and removing much of the frustration involved in the home buying process.

Closing Costs

Closing costs come out to a small percentage of the cost to sell the home. They are comprised of all fees that you’re not immediately responsible for. Home inspection, for example, is not typically a part of closing costs because inspectors are usually paid the day of the inspection. Agents, however, are paid at closing time and their portion comes from the seller side.

Closing costs usually cover standard transactions like credit checks and escrow for taxes. However, they also cover fees for appraisers and other professionals involved in the sale of the home. Many of these costs are non-negotiable, but you should ask about everything you see on your statements. Individually, these costs are manageable. Combined into one lump sum and they will add an additional 5% to your down payment. Of course, costs do differ in each transaction, but that’s what makes it so crucial to get a statement of closing costs as soon as possible. Badger your broker daily over the phone if you have to.

Inspection and Warranty

The good news is that your home will usually come with a one year warranty on it that covers many common problems that can happen after your move-in date. There will be a small charge to get these problems repaired, but you end up paying less than you would to pay the technician. Of course, that should not give you license to think it’s ok to blow off the home inspection entirely. Foundation problems, or leaks in the roof are costly fixes that you need to know about before you put money down on a property.

A home inspection is done by a trained inspector, someone with a background in construction usually, who will look through all the nooks and crannies of a home. This person will help you find leaks, or identify how old the hardware in the home is. They are an important part of the process for the buyer, because they give you what you need to negotiate on closing costs. Once you have a list of what’s wrong, point to your inspection report and demand either fixes or money to cover the damage.

Moving Costs

It’s easy to forget to hire a moving company too. This is a cost that gets overlooked when you’re considering the true price of owning a home. A moving company can add hundreds, possibly thousands to your final bill for the home sale. Also, plan for your move to take at least eight hours. Even if you have a one bedroom apartment, there are variables like traffic and bulk items that add to your time slot. If your move takes less, then it’s a pleasant surprise. If it starts to take more, then you have cause for concern.

Time Off From Work

You would be surprised at how often escrow can fall on a Monday, which is very inconvenient for most people. Schedule plenty of time for yourself, and try to give yourself an extra day at the new house to get settled. It’s best to spend some time unpacking and enjoying your new house. It will help alleviate some of the anxiety of settling down, and make it easier to focus on life outside the home.

Put your job on notice as soon as you enter escrow. This way, management has plenty of time to make allowances in your schedule.

Repair Costs

The inspection will cover a lot of the trouble spots in your home, but not all of them. An inspector isn’t going to check electrical, for instance, and probably won’t check sprinklers either. They will usually supply a list of what they will or won’t expect prior to the inspection, however problems crop up all the time. Air conditioning units can last ten to twenty years in some cases, but they may break down 21 years into their life span. If that year happens to be the year you buy the home, you landed with an expensive fix. Unfortunately, you can’t predict these costs. What you can do is leave enough money for yourself after closing to deal with them.

Insurance

Insurance is an added cost of ownership that every home owner deals with, and it will remain with your for life. Though you may never use it, insurance is there to protect you from liabilities. It’s a worthwhile investment over time, but it may be more important depending on where you are. Places where storms are common, for example, will need insurance on a routine basis. Earthquake and fire prone zones like California have the same issues.

The good news is that you have time to shop around for an insurance provider before escrow closes. You will need to show proof of insurance before you own the home, but you can compare rates if you make a few phones calls. Your agent and your broker may also have some thoughts on where to go to get good coverage.

Insurance isn’t something you want to skimp on. When you need it, it will drastically decrease the burden you need to carry.

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Bio: Kuba Jewgieniew is the CEO of Realty ONE Group, a results-driven real estate brokerage. Realty ONE Group also holds an annual event to work with local non-profits called “ONE Day.”

Shedding debt to get ahead

Debt consumes many of us. Trying to dig out of a debt hole is not easy and takes time. However, if you plan properly, you can get out of the debt hole sooner than you think. Many adults are burden with credit card and other debt. Young adults coming out of college carry hefty student loans more than ever.

Tracking your expenses carefully will help. Goal is to cut your expenses lower than your earnings. You can invest the difference for better gains now and continue to generate gains into the future. That is one way to accumulate wealth while taking care of debt.

Housing, especially if you have a mortgage, takes more than 40 percent of your income. You can consider other options to cut your housing expense. Consider co-owning a home with a friend or family member. Look at buying a foreclosed home to lower your monthly mortgage and do all needed repairs by yourself while living in the home.

Attack your debt head on. Some start with the highest interest rate debt first. Consider paying debt such as credit card debt that does not come with tax advantages before paying off mortgage and student loans. Stick to a plan of repaying your debt and remember it could take time.