Shopping for a House
Excerpted from the book, It’s More Than Money—It’s Your Life
by Candace Bahr, CEA, CDFA and Ginita Wall, CPA, CFP
Is
it time to go house hunting? If so,
here are eight great tips to help you
get the best deal:
- Start with
the basics. Read
the classifieds, visit open houses,
and let brokers know what kind
of housing you're seeking. Apply
to a lender for preapproval so you'll
know exactly how much home you can
afford and so buyers will know you
are serious. Shopping for a home
can be exciting; it's also time-consuming
and occasionally frustrating. Don't
expect to find the perfect place
overnight, and don't jump at the
first house you see. Your decision
will affect your lifestyle for the
next several years, so shop judiciously.
- Look online
The proliferation of websites devoted to home listings makes it easier than ever to find the right residence. Use your favorite search engine to look for sites that can help you narrow the search for a house, provide you with credit reports, put you in touch with real estate agents, and even let you apply for a mortgage online!
- Shop strategically
You may be able to save thousands of dollars on the cost of your house by looking for sellers eager to offload their property. Perhaps the house has been on the market for a long time or is already vacant. A seller who is divorcing or has recently experienced a death in the family might be anxious to make a deal.
- Beware of hidden expenses
An extensive yard may be beautiful, but will you need an expensive gardener to keep up with the weeds? A pool is fun, but will the utility cost drown you? Country living is grand, but will it cost you an extra grand a year to pay for the gas you use in your daily commute?
- Inspect before you buy
Hire a reputable home inspector to scrutinize the structure, the electrical, heating and plumbing systems, as well as the property's general interior. Include a contingency clause in your contract so you can back out if your inspection reveals serious defects.
- Think before you ink
When you sign a contract, include a contingency clause that the sale will be canceled if you are unable to obtain financing. Agree on which closing costs you will pay, and which will be paid by the seller. Identify the items included in the sales price, such as draperies, chandeliers and appliances, so there are no misunderstandings at closing.
- Put as much down as possible
With 20 percent down, you'll save the cost of Private Mortgage Insurance, and you may get a better interest rate as well. Where can you get the money to beef up your down payment? Consider asking Mom and Dad to help foot the bill, either as a loan or a gift. Or if you haven't owned a home within the last two years, you can withdraw up to $10,000 from an IRA to buy a principal residence. You can borrow from your 401(k) plan, but if you leave your job, you will have to repay the loan immediately.
- Consider how to take title
Your home is likely to be one of your largest investments, so carefully consider how to take title, and consult with a lawyer if necessary. Here are some common ways people take title. If you are single, you'll probably take title in your name alone. In many states, married couples hold their property as Tenants by the Entirety, meaning they share joint ownership and the property cannot be sold to satisfy the debts of only one owner. In other states, Joint Tenancy is most common, and upon death the surviving owner inherits the entire property without it going through probate. Unmarried co-owners generally take title as Tenants in Common, with each owning a specified percentage of the property. The owners can sell their interests or will their interests to someone else without consent of the other co-owner.
At WIFE we welcome your comments. Please feel free to contact us.
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