How to Get Ready to Buy a Home
Buying a home is like hunting in the American west. Its takes a great deal of experience combined with a great deal of knowledge and planning. A hunter needs to research the particular animal being hunted, understand the terrain, the habits, the process and then the hunter needs to make a plan. If a hunter who has never hunted in a particular region or the particular animal jumps in their vehicle and takes off for the hunt without a planning the odds of a successful hunt are minimized. The same principles apply for a person in the market to purchase a home. Buying a home takes a great amount of personal experience making realtors with a high amount of experience extremely valuable or even an individual who is buying more than just their first home will be in a greater boat than a first time buyer. Even with a realtor, or personal experience, just like the hunter, a buyer needs knowledge and more importantly, a plan.
Realtors, layers, mortgage brokers, inspectors, sellers, etc. all play a role in buying a home, and they will often times be demanding and will want answers to their questions, having a plan prepares a first time buyer or repeated buyer to answer the demanding questions. A plan could do well to include answers to questions like does the buyer want to be in a well established neighborhood that has been around a while or do they want to be in a new house in a new subdivision. Or questions like: is the home due to a lifestyle change, or is the home more of a choice and not a last resort spontaneous purchase. Many more questions could be presented in helping develop a plan by an experienced realtor.
If a hunter jumps in their truck and takes off to the hunting site without first earning the money to fund the trip, the hunter will fail. Just like a hunter must have money for gas, ammunition, food, and a butcher, a home buyer must have the money saved up for the down payment. Traditionally, a lender wanted the buyer to put down as much as twenty percent of the homes value on the loan to ensure the home buyer would not walk away from the mortgage. Twenty percent is a lot of money for a young home buyer or any person who has not had ample time to prepare or save for a home. In the last decade many mortgages have become friendlier with may appearing as low as five percent down or even zero down. A word of caution, the lower the down payment, the higher the interest will be on the home as a compensation fort the risk.
After the hunter finishes the successful hunt and brings home a trophy Elk in Colorado he now comes home and discovers that the original costs of the hunt were just half the battle, now the hunter must pay the taxidermist a large sum of money to stuff the animal. The home buyer saves the money for a down payment and then discovers the closing costs. Closing costs are all the fees associated with closing on the loan. These costs could be anywhere between three and eight percent of the entire cost of the home. The closing costs must also be saved up for.