Home Buying Tips: How To Prepare Yourself For Making An Offer

In case you missed it, I recently bought a house! Although my home buying experience was quick, semi painless, and pretty easy, home buying is a lot more complicated that getting a loan for a car. Trust me. After hearing plenty of stories from my friends and family- and experiencing it myself-I learned that there is a lot more to  buying a house than just calling a bank and giving them some money.

 

 

Start planning before you’re ready.
Although there are plenty of programs out there for first time homebuyers that offer down payment assistance and low interest rates, you’ll need a lot of money up front to buy the house. Closing costs, cash deposits, furniture, deposits for utilities, I could go on! It all adds up, you may be told by your banker that you only need your down payment and ernest money to close, but in truth, you need a lot more. Unless you already have your furniture and food, you’re going to be pretty cash poor starting out. This is why financially planning long before you’re ready makes a world of difference!

 

Want to know when I started saving for a house? When I was in college, granted, I could barely put a dime in my savings and it wasn’t much, I saved and saved (then spent and spent and spent, whoops) because I knew I wanted to be able to be successful at buying a home.Although over the years I’ve ran into financial difficulties and have had emergencies that have essentially depleted my savings (and lived in an overpriced, but nice, rental that had way too expensive of utilities) I tried to save and have ended up with a big chunk in my savings for all of these savings.

 

Buy used or get hand-me-down furniture
Yes, the special at the furniture store is amazing. $3000 for living room, dining room, and bedroom furniture may be a great deal, but free or dirt-cheap is even better!Ask your family and friends if they have any extra furniture or household items they’re looking to get rid of.Anyone you know moving? Great, help them out by taking some furniture off their hands. Flea markets and thrift stores are great places to find furniture at, and you can always paint everything to match while still saving a buck!

 

Check out my auction secrets so you can save even more when you buy used!

 

Also, wait until after you close on the house and have the keys in hand to get any extra loans for furniture or appliances (if you really want to go that route). If you get a huge line of credit for your new furniture set or new appliances and you haven’t closed, the bank may deny you for being “unreliable” for opening up more credit. They may not do that, but I know someone who that happened to and they lost their  home because of this mistake, so just play it safe and don’t spend much until after the keys are in your hand!

 

Make a list of what you want, need, and don’t want

My must have list was quite general: 3 bedrooms, 1 1/2 or more baths, big kitchen, off street parking, the basics! But  when house hunting I also had a second list, what I really wanted that would be a bonus, and what I couldn’t deal with.

 

After seeing 2 homes the main item on my can’t have list was a basement. I just didn’t want to deal with having one and the possibility of mold. I also had on that list that it can’t be near a main road.

 

On my want list was: big windows, new carpet, garage, and landscaping.

 

Be prepared to have to change your need list around a lot after seeing a few homes- unless your price range is ridiculously awesome, unlike my limited list.

 

Buy less than you can afford
My mortgage payment, including taxes and insurance, is less than the rent in my last 3 rentals- renting is the biggest waste of money ever in my opinion, but you’ve gotta do what you gotta do. Could I afforda mortgage payment that matched my old rent? Of course, but I wanted a home that was more affordable in case emergencies came up, and because I wanted to live more comfortably and have more fun.

 

It’s no fun having a home if you have no money to do anything with it, so choose your price range wisely. I told my loan office what I could afford per month at the maximum, and they approved me for that amount, but when I went house hunting I looked for houses that were well below my price range (which I will get into later). Don’t forget that your mortgage payment can go up each year depending on the type of loan you have, your insurance, and your taxes so take this into consideration, too.

 

Don’t imagine yourself living there until you have it
I made this mistake three times when house hunting. Before I even saw two of the homes in person, I was already redecorating and imagining myself living in those houses, then when I didn’t get the homes I was a bit heart broken. The first home had low ceilings that needed to be heightened and that would cost too much to repair, which means I’d have a whole half of my house that I couldn’t use much. The second house was filled with mold and water damage, and was unlivable until it was completely gutted. When I finally realized I couldn’t get those houses, I was quite upset.

 

Wait, but isn’t the point of house hunting finding a house you can see yourself living in? Of course! But don’t be like me and spend days thinking nonstop about one house and imaging your entire life playing out in that house (I had a lot of extra spare time when I was house hunting). Don’t invest yourself too much emotionally into one home, but just enough to find out if the home could work for you.

 

Set your price and stick to it, but be prepared to negotiate
When I found the house I purchased, it was $10,000 over my maximum price range- I didn’t even want to look at it because of that, but my Realtor convinced me that it would be a great idea since the sellers were desperate. So I looked at the house and made an offer the next day that was well under what I knew I could afford.

 

Why did I do this?

 

Because I knew that the sellers would come back with a counter offer, they often do that, such pesky people ;), and I wanted to see how far down they were willing to go (which was only $1,000, lame) and then make a decision from there about counteroffering. Go in with a plan of attack that leads room for the negotiation that will almost for sure happen.

 

In the end, I paid more for the house than I planned, but it was still well under what I could afford. I spoke with my lender about the counter offer, ran some numbers and found out this house would be cheaper monthly than another house I liked that was cheaper. This is because the taxes and insurance on that house were a lot less than the other house. This is why it is so important to know how much the taxes are on the home and what the insurance would be, these two things could take a house you thought you could afford out of your price range.

 

Which reminds me…

 

Call your insurance company
Here is a fun fact; I work for an insurance company, so insurance is on my mind a lot. I know, how exciting!

 

When I was house hunting I pestered my insurance agent for quotes on the houses I liked so I could calculate my monthly mortgage payments for each home and see if they were affordable or not. Turns out, my monthly insurance on the home I bought was $20 less than what my mortgage company quoted me with when calculating my mortgage, score!

 

You also have to secure your insurance coverage before you get the keys, and sometimes upon inspecting the home, the insurance company may come back to you with issues that need to be fixed, my issue was that the tree branches were over the roof (which was already being fixed), if I would have waited until the last minute for this, then it would have pushed back my closing date. Waiting until the last minute to deal with the insurance could result in a slowed down closing if your agent tells you that there are issues that need to be dealt with, and no one wants to be living out of boxes for longer than necessary!

 

Buying a fixer upper isn’t always the best idea
As I mentioned earlier, I looked at houses that were well below my price range, but then I had to change my plan of attack. Why? Because all the houses that were cheaper were filled with problems.
Ugly paint and old carpet are one thing, but mold and smoke stains and wood rot are another. When choosing a house don’t just focus on the price of the house, focus on the price of fixing the house, too. When I found houses I loved that needed work, I searched around for prices to fix all of the problems, and it turned out that it would cost more than buying a house close to my max price range that needed no work.

 

With all my heart I wanted a fixer upper, I wanted to tear out ugly carpet, repaint walls, and tile a kitchen, but in reality, I couldn’t afford that. Lucky for me, I have a great friend who told me I can remodel her home for/with her.  And this isn’t my forever home, so I can always fix up my dream home later in life.

 

 

Phew! That was a LOT of words! Did you make it all the way through? I know it was a lot, but home buying is rough and tough business people! There is a lot to learn, and I only scratched the surface here!
Do you have any more tips for house hunters or first time homebuyers? Leave it in the comments below!

 

Linking Up With:

A Night Owl Blog,Carrie This Home, Love Grows Wild, Boogie Board Cottage, Coastal Charm, Dwelling In Happiness, The Dedicated House, Confessions of a Plate Addict, A Stroll Thru Life, House on the Way, Tiny Sidekick, The Official Blog Guide, Enjoy the View, Oh My Creative, Just a Girl and Her Blog, Happy Kids Inc, Living Well Spending Less, Someday Crafts, The Blissful Bee, The Kitchen and Beyond, Ruffles and Rainboots, Hymns and Verses, The 36th Avenue, Practically Functional, Domestic Superhero, Coffee With Us 3, Reasons to Skip the Housework, Nifty Thrifty Things, Our Rosey Life, Flamingo Toes, 

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