Home buying ranks among life's biggest financial decisions, and getting the basics wrong can cost you tens of thousands of dollars. Real estate experts offer nine concrete strategies to protect your interests and secure better terms.
Start with your finances before house hunting begins. Get preapproved for a mortgage from multiple lenders. Compare rates from at least three banks or credit unions. Shop around for better terms. A half-percentage point difference on a 30-year mortgage translates to tens of thousands in interest charges. Know your credit score and fix errors before applying. Lenders offer better rates to borrowers with scores above 740.
Build a down payment of at least 20 percent if possible. This avoids private mortgage insurance, which adds hundreds monthly to your payment. Save aggressively for this goal before purchasing.
Get a home inspection before closing. Pay a licensed inspector to evaluate the roof, foundation, plumbing, electrical systems, and HVAC equipment. This catches expensive surprises. Budget $300 to $500 for the inspection. Problems discovered here give you negotiating power.
Work with a buyer's agent who represents your interests, not the seller's. Your agent should know the local market inside out. Ask for references from past clients. A good agent earns their commission through better deals and protection from predatory practices.
Research the neighborhood thoroughly. Visit at different times of day and days of the week. Check crime statistics, school ratings, property tax rates, and future development plans. Talk to current residents about their experience.
Don't max out your mortgage approval amount. Lenders approve based on income ratios, not your actual ability to handle payments comfortably. A home payment should consume no more than 28 percent of gross monthly income. Factor in property taxes, insurance, utilities, and maintenance costs.
Get homeowners insurance quotes before closing. Insurance costs vary dramatically by company and location. Lock