HOME BUYING CHECKLISTS

HOME BUYING CHECKLIST by 

        Anthony O. Anyakora

"Checklist is one of the most high powered productivity tool ever discovered."

                       -Brian Tracy

Real estate investments are usually capital intensive and requires a prospective investor to carry out due diligence before embarking on them. When buying a home, you and your family have a lot of decisions to make.

Here is a checklist I have made to help you remember all the important details to look out for while hunting for your dream home. The list includes but not limited to:

*Determine your budget   

*Save for down payment

*Get a mortgage and choose a lender

*Get a realtor

*Find your dream home

(A) Interior checklist

*Wall and floor condition

*Odor

(B) Exterior checklist

*Location & Environment

Determine your budget: The best way to start your home buying process is by stating clearly your budget. By identifying a realistic budget, you can embark on your search with a firm understanding of your price range. It is important to know your debt-to-income ratio (DTI), your monthly expenses versus your monthly cash intake. This includes all the bills you have to pay, divided by your gross monthly income. When you consider your debts, include any recurring bills, such as electricity bill, refuse disposal bill, Water rate and any other monthly payments.

If you intend to buy a property through mortgage, it is important to make a sizeable down payment, which will save you a great deal over the life of the loan. Here is how:

A down payment of 20% or more will exempt you from private mortgage insurance (PMI). That’s a fee your lender will typically require with a down payment of less than 20%, in order to make sure you don’t “default” on the loan. While the cost of coverage is based on the risk factors, such as your DTI, credit score and more, it’s just one more expense that any homeowner would prefer not to have.

A bigger down payment will often result in a lower interest rate; that’s because a lower loan-to-value ratio (LTV) decreases your lender’s risk.

The bigger the initial payment against the principal the less interest a borrower will pay over life of the loan, potentially saving thousands naira.

A bigger down payment results in smaller monthly payments.

 

One of the ways prospective buyers can speed-up the sale process and give themselves heads-up on the competition is to apply for a mortgage pre-approval before they have  found the house they want to buy.

Usually when one applies for a mortgage, it is done after you have found the house that you want and certain how much the owner is willing to sell. The bank will evaluate your finances and assets and the house itself and make a decision as to whether or not you will be able to make payments if they lend you the funds to buy the property. Basically, with a mortgage pre approval, you are requesting the bank to take a chance on you without even having the chance to look at the property or know what its worth.

With a mortgage pre-approval, you approach your bank as soon as you know you are going to start looking for real estate. They will look into your finances and determine the maximum amount of money they are willing to lend you and pre-approve you to borrow up to this amount once you find a property that you like. The pre-approved amount then becomes your house hunting budget and you narrow your search accordingly. If you find a home that exceeds your pre-approved amount, you will have to re-apply with the bank for approval.

Due to the extra risk involved in agreeing to lend money before the bank knows what kind of real estate you are going to acquire, generally, only customers with excellent credit score and a lot of business with the bank will be pre-approved for mortgages. First time home buyers and buyers who have been foreclosed upon or have outstanding debts to other lenders will most likely not be pre-approved for a mortgage unless they are able to get a reliable person with good credit score to co-sign the loan with them.

The major advantage in acquiring a mortgage pre-approval is that it takes the uncertainty out home shopping. This may even be enough to give you edge over buyers who have made slightly higher offers with no guarantees; ‘‘as a bird in hand is worth two in the bush.’’ Once this is settled you can put your focus towards getting a proper inspection of the property before you conclude on the sale.

Wall and floor condition: The importance of this cannot be over emphasized. Warped floors, watermarks and cracks in walls are displeasing to the eye and can be a sign of really big issues in a home. If you find any of these things, do some digging to make sure the issues don’t run deeper. A thread line crack may not be a big deal but signs of water damage or termites can be. 

Water damage can affect your walls and ceilings too. Check out the walls and ceilings too. Water damage may be difficult and expensive to repair, especially if it’s been neglected for so long.

When touring a home, it is important you take a deep breath to perceive if there is an odor which might be due to poor ventilation, poor plumbing job. It’s important this is cleared before proceeding with the transaction.

Location & Environment: Your immediate environment tells a lot about your personality. It is important you do a background check on your potential new neighborhood and not rely solely on the listing boards. Here are some factors to consider before settling down in a new neighborhood.

Security

School rankings

Noise pollution

Flood and drainage system

Traffic flow etc.

Get a realtor:  A realtor is one who is equipped with knowledge of real property and also look over the purchase agreement, title documents and other paperwork to make sure it’s all in good order (@whitestonehomesandproperties). It is important to note that the realtor does not take the place of a lawyer who carries out title search. Although getting a realtor comes with a fee, it is well worth it in the long run, because it reduces the hassle of buying a property. 

So make sure to bring your checklist and pen with you when you are looking for your next home.

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