Here's another helpful post from our friends at Zillow. Check it out:
The home shopping season is officially underway, and home sales are expected to pick up pace this year as buyers look to take advantage of affordable home prices and record-low mortgage rates.
If you’re thinking of taking the plunge into homeownership, ask yourself some basic questions and get informed about the home-buying process. It’s easier than ever to do your home-buying homework, and save yourself some stress.
Here are five tips to help buyers—whether they are first-time home buyers or not—better navigate the process.
1. Be in It for the Long Haul
A recent Zillow survey showed that 42% of buyers believe home values typically appreciate by 7% a year. In reality, home values have historically appreciated by 2-5% each year, and over the next few years, little to no appreciation is expected in most markets. But if you are buying a home as a place to live and are planning to stay a while, it shouldn’t really matter if home values remain flat for the next couple of years.
Tip: To ensure long-time love, search for a home that can accommodate potential lifestyle changes such as a new job in a different location or a growing family.
2. Run the Numbers
It’s easy to get caught up in the fun aspects of home buying, like deciding what color to paint the living room, and lose sight of affordability concerns. It can be difficult to understand how a six-figure purchase will actually affect your monthly budget.
So, before you fall in love with a house that’s out of your price range, do the math to figure out what you can afford and then calculate how much income you’ll have left over after paying your mortgage and taxes. It’s easy to run the numbers using the numerous affordability calculators available. Take advantage of Zillow’s mobile calculators, including the Zillow Mortgage Marketplace Android App and Zillow iPhone App, which includes a mortgage calculator.
Tip: Don’t forget about added costs of home purchase and ownership. Budget to spend 1-3% for annual repairs and maintenance. With homeownership, expect the unexpected!
3. Love the Neighborhood
If you don’t like your neighborhood, you’ll never love your home. Most buyers narrow their home search by affordability, school districts and commute times. However, it can be challenging to pick up on all the pros and cons of a neighborhood when you don’t live there. That’s where a new tool like Neighborhood Advice comes in handy. It helps buyers learn about neighborhoods from their Facebook friends connected to the area while they shop for homes on Zillow.
Tip: When you find a home you like, visit the home and street at various times of day and night so you can get a sense of neighborhood noise and traffic.
4. Hire the Right Help
Hire a great real estate agent and lender, and you’ll save yourself a lot of unnecessary headaches. Ask friends and co-workers for recommendations, but also read online agent and lender reviews, and take the time to interview at least three agents to make sure your communication styles mesh. You are entrusting this person to help you with one of the most expensive decisions of your life, so take the time to find the best person for the job.
Tip: When you interview agents, ask questions like how many homes you can expect to see before finding the right one, who will come up with pricing and how multiple offers are handled.
5. Shop Around
Financing. It’s probably the least fun and most stressful part of the home buying process, but it’s also the most important. Unfortunately, one-third of borrowers spend less than two hours researching their home loan–compared with ten hours of research for a car purchase, and five hours for a vacation. However, shaving even half a percentage point off your mortgage rate can save you thousands of dollars over the life of the loan, so make sure you get more than one quote.
Tip: Take this Mortgage IQ Quiz and familiarize yourself with the rules and terms you’ll likely encounter during the financing process. It will be much easier to have a conversation with a lender when you understand the basics.