Buying a House

5 Steps to Buying a New Home

Think about what you’re after

  • Where you do want to live, what type of house interests you, and what features are important to you?  
  • When you buy a home, consider the time you’ll commute to work, shopping, and community events.  
  • Are you going to buy a townhome with no yard work involved or a home with a yard?  
  • Do you want a finished basement or is it more important to you to spend that money on other features in the home?

Get pre-qualified

Before you start setting your heart on homes out of your reach, have a realistic expectation of what you’ll be buying and you can save time and money from the start. You’ll also be able to see what financing options are available to you, whether you are a veteran or a first-time home buyer. According to Home Buying Kit for Dummies, neither a mortgage lender nor a real estate agent can tell you how much to borrow, but they can tell you the maximum amount you’re eligible to borrow. So many questions can be answered once you’ve taken this important step and remember, you can shop around for the right mortgage.

The search

  • A typical buyer spends 12 weeks looking for the right pre-owned home.  It may take far less time once you decide you want a new home.
  • Having a separate list for your “must haves” and another for your “would be nice” features may help you to keep your priorities straight.
  • Buying in a new home community assures a streamlined building process that gives you higher value for your money.  You won’t have to worry about out-dated appliances, dated flooring and cabinets, or unsightly landscaping – you’ll have a new slate to make the home just the way you like it.
  • While much of your research can be done online, seeing the neighborhood at different times of the day can answer questions you didn’t know you had.  
  • With an eye toward the resell value of your new home, you’ll be well on your way to benefiting from a great investment.

Assuming you are interested in a NEW home

Meet with the builder

  • Can you see pride in their workmanship?  Look at their homes – do you see features you’d like in your own home?  Writing down your preferences can help.
  • Do they integrate efficiency with beauty?
  • Do they have plenty of upgrades for you to make the house reflect your personality and preferences?
  • Do they seem like people you would like to work with?
  • Do they take time to address your concerns?

While it may be easy to get bogged down in the finite details, trust your builder’s experience as their expertise will quickly be seen. They’ll help you steer clear of less-obvious pitfalls like a funky floor plan that will not be desirable to future prospective buyers. Since your home is new, you won’t have to negotiate your purchase price because you chose the features in it, thereby choosing the cost.

Finally, finalize your purchase.  Go back to the financial institution that pre-approved your purchase and discuss financing options and conditions as well as escrow closing dates. Can you feel the excitement? You are about to get the keys for your brand-new home or town home! Your financial preparation and research make this decision a step toward a solid and exciting investment in your future.

Planning for a Down Payment

Homeownership is one of the hallmarks of the American Dream yet many first-time home owners find the prospect daunting, and questions about financing baffling.  While Millennials are often quick to Google or research the process online, there is no substitute for talking to a lender – a person who can directly and accurately answer financial questions. What they find may be surprising – perhaps the amount needed for a down payment isn’t as much as they expected.

It was once thought that a 20% down payment was needed before talking about owning a home.  According to Jonathan Smoke of Realtor.com, “the average down payment in the U.S. on mortgages used to purchase a home was 11%, according to our analysis of loan records from Optimal Blue, an enterprise lending software company.”  Depending on the location and demand of the market, “Government backed FHA, VA, and USDA mortgages featured average down payments of 3.5, 0, and 0% respectively.”

Purchasing a home may be a closer reality for many families once they know more accurately how much money is needed for a down payment.  Information is the anecdote for uncertainty, and hopeful home buyers may be closer to owning a piece of the American Dream than they realize.

Home Builder

Why Should you Buy a House as Opposed to Renting?

7 straight-forward Steps to Home-Ownership

Most people realize that when you rent, you can move around more easily and you don’t have a big commitment to the area or apartment.  Low input, because you don’t have to do repairs or improve the property, but you also get low output.  Rarely can you paint or change what’s there, and for a creative person, that’s a huge drawback.  Every month you pay rent, you are helping someone else build equity in their investment when you could be building your own equity.

Why not put your energies toward a property that’s not only yours to improve, but yours to reap the investment?  Perhaps you don’t know how to adjust sprinklers or know how to hang drapes.  There’s no better time to learn and since research on such topics is just a few clicks away, there is no mystery.  When you purchase a new home, repairs or improvements will be at a minimum.  Your fresh, new home will leave you inspired and secure in the knowledge that your investment will increase in value.

Your new home investment will bring your family stability, it will increase in value, and you’ll feel pride of ownership you may have never known before.  An intangible benefit is how connected you’ll feel to the neighborhood and community.

Richard, a young adult in Salt Lake City, looked forward to home ownership.  He postponed buying a home until he was secure in his job.  This was the process he used to find a place to live:

  1. He googled it, got some ideas, and became overwhelmed with what he thought was an enormous process.  Though there was plenty of online advice, he was unable to set a plan.
  2. He called up friends and family for advice and asked about re-sale value, and whether he should start with a realtor, and asked about homes vs condominiums.
  3. He decided to find a reputable mortgage lender and get pre-qualified.  He now knew what price range to focus on.
  4. He knew he wanted to live near his workplace, so he started doing online research in the area where he worked to find a builder.
    • His choices started expanding as he realized he could get a home 35 miles away from family or buy a condominium nearby his workplace – where would his priorities lead him?
    • Were his familial ties such that he wanted to live close to family or was that a consideration?  Some people may want to time the drive to see how big of an issue this may be.
    • Did he want to do yard work or was he more interested in city living?
    • MIT did a study that showed most people were willing to drive up to 45 minutes to work, but beyond that was a stretch.
  1.  He drove around different properties and developments and started forming opinions on what he liked. He noticed the curb appeal of a number of properties as well as the locations. He took the time to walk through a few homes to see what amenities were in his price range. He spoke with a few builders to see what options were possible and began forming a priority list.
  2.  Next, he wondered if he needed a real estate agent so he did some research, talked to friends and family, and decided he didn’t necessarily need one at that point.
  3.  While the purchase price was a good way to compare the affordability of certain homes, getting down to the real payment amount became paramount. He went back to the mortgage lender with additional questions.

Narrowing down his search, things starting feeling real. He could soon see that this purchase was not only possible, but an exciting process.

The closer he got to finding a home for him to enjoy, the quicker he realized all the drawbacks of living in an apartment. Soon he would no longer have to wonder who’s making all the noise in the area and when would they be moving out. He would no longer have to wonder when the next rent increase would be. He could look forward to enjoying a home of his own and making that home reflect his personality. While purchasing a home might feel like a daunting process, it’s actually as doable as these steps; take the process one step at a time, one day at a time.