Homebuying 101

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“Homeownership is the cornerstone of a strong community.”  – Rick Renzi

Remember when Dorothy clapped her heels together, saying, “There’s no place like home?”  Well, that phrase is true…to a certain degree.  Most Americans dream of having a place to call home.  Their years of sweat and tears are relieved when they can rest their heads in a place they own.  This article serves as a brief step-by-step manual for those who are ready to turn their dream into a reality.

STEP 1:  KNOW WHAT YOU WANT

In order to get a house, the first thing you must know is what you really want.  The direct essentials you want in a house should be determined in this stage.  This can look differently for people – a single person may have different priorities than a family.  Throughout this first step, identify the type, size, and purpose for buying a home.

Do you want a house, townhouse, or a condo?

How many rooms or type of aesthetic do you want?

Do you want a fixer upper or everything you desire to be included?

The indirect point of view should also be considered when purchasing a home.  Motley Fool, an internet-based company that provides financial advice for investors, believe the following five factors are most influential when choosing a home:

  • Reduce crime
  • Strength in economics
  • Increased civic engagement
  • Higher education performance in children
  • Potential for price appreciation

STEP 2:  KNOW WHAT YOU CAN AFFORD

By the end of Step 1, the needs and the wants are divided and you are able to realistically think about what you can afford.  We all want the house with the indoor Jacuzzi on the roof and a shark tank beneath it so we can impress our neighbors.  However, our economic situation should always be our conscious.  For this reason, Step 2 is probably the most important step of the home buying process.

STEP 3:  START SHOPPING

Once you know where you stand in purchasing a home, it’s time to begin searching for that home.  The internet is a good starting place to search for homes in the areas where you want to live.  Redfin, Trulia, and Realtor are great websites to get your feet wet.  After you find a specific house, contact a real estate agent or the home owner to set up a viewing appointment.

When you view a home, I suggest bringing a close family member or friend who has experience in home maintenance.  They can give you an estimate of the extra work you might have to do and also gauge if the home is worth buying.  It is also important to view a home in the day time; looking around a home after dark, even with a flashlight, can limit your ability to see problems with the house.

STEP 4:  MAKE AN OFFER

Once you have decided on the home you want to buy, don’t get too excited right away.  If you are planning to pay a mortgage, you will need a mortgage loan officer (which will be discussed in a later article).  Research past prices for houses in that area, and make sure you can really compare the home you want with others in the neighborhood.

It is also important to learn the status of the home – foreclosure or short sale – as it might affect your decision.  Also, consider if there is extra work that will need to be done to the home, and also if other people are bidding on it.  When all of these factors are considered, and you still want to continue with the purchase, put your bid in.  Listen to the suggestions from your agent or from family and friends but remember, bid on the price that YOU believe the house will sell for.

STEP 5:  SIGNING DAY

The end of the home buying process is a crucial time.  Be sure to read over the entire contract before signing it.  You now have your ducks in a row and are ready to become a homeowner.  Before I say congratulations, make sure the following steps are complete:

  • Home inspection
  • Homeowner’s insurance
  • Estimate the taxes or association fees on the home

This article provides a crash course on what is needed for you to become a home owner.  Please seek advice from other experienced professionals, like the West Cook Homeownership Center, before you make this important step of being a home owner.

By Keith Mansa, Finance Contributor