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Five things every house hunter should know when buying a home

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Posted: Friday, February 14, 2014 6:09 am

Buying a new home can be quite the undertaking, and in many ways, it’s a numbers game. Here are five stats, numbers and percentages you’ll need to be familiar with to give you that winning edge.

Did you know that today 90 percent of all buyers begin their home shopping online? It’s the best way to get familiar with the market, the houses, the prices, the neighborhoods and the current inventory, without leaving your home or office. With every click of that mouse, you become a more educated, smarter home shopper. And a smart buyer gets a better house – and pays less. You can search for properties, compare homes and neighborhoods and view street views as well as satellite views. You can rate schools and even pull up crime stats for you area. Using the internet and searching the local multiple listing website will help you weed out homes you are not interested.

Based upon the national rates of home appreciation and prices, most homebuyers should consider buying only if they plan to live in their home for a minimum of 5 years. If you have to sell again relatively soon, you could lose money. Generally, a home is not a good short-term investment because the transaction costs are too high. Yes, you will have been paying down some of your mortgage monthly, but when you factor in paying an agent between 4-6 percent of the sales price and monthly costs, this can amount to more than the average long-term annual national home price appreciation rate.

When house hunting, knowing how long a home has been on the market can help you gauge if it’s priced too high, has too many flaws or if something else is a factor. Homes in the right neighborhoods that are priced correctly tend to spend the least amount of days on the market. Overpriced homes compared to comps, or homes that have major structural or cosmetic issues, tend to sit on the market much longer. Some of them may be slightly overpriced and just need a bit of TLC. With a little imagination and the right guidance from an agent, this could be your dream home.

How much will your home cost every month. Your mortgage and estimated taxes and insurance equals that figure. Consulting a lender to see how much home you can afford is necessary prior to looking at homes. Your lender can calculate closing costs and your monthly payment.

Under the brand new “Qualified Loan” mortgage rules, in general, the borrower’s debt, including mortgage payments, can’t total more than 43% of gross monthly income (although there are exceptions to that cap for the next several years). Also, points and fees are limited to 3 percent of the loan amount. Your lender can explain all this in detail and help you decide where you can purchase.

We hope you find this information helpful as there is no better savings plan than purchasing a home!

Eileen Schamber is the president of the Lodi Association of Realtors and can be reached at president@yourlocalaor.com.

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