Five Tips on How to Shop for a Home
January 10, 2023
Want to know how to shop for a home in 2023? FHA home loan limits have increased for the third year in a row and many borrowers are wondering about their options to buy or refinance this year. Here are five things you can do to get ready.
Compare Prices
No, we are NOT talking about home prices, lender interest rates or home inspection fees. That is typical Home Loan 101-type advice.
There are some overlooked expenses you should not only anticipate, but compare the numbers for. The lender’s origination fee is one--how much does your home loan cost when it comes to lender fees?
Be sure to compare lender fees among several companies and be sure to ask whether there are ways to lower the fee or other closing costs to offset the fee. In some cases there may be nothing you can do except find a lender with the most reasonable fee.
Lender fees (depending on whether your loan is conventional or backed by the government like an FHA mortgage) may vary between one and two percent of the purchase price.
Decide on the Property Size Early
If you are looking for a single-unit home but might expect a change in family size due to a marriage, birth, additional housemates, or other variables, you have a dilemma. Buy a home that is smaller and less expensive, but one you could grow out of quickly?
Or commit to a larger financial commitment knowing you won’t have to do the whole process all over again in a few years? It’s an important decision.
Do Some Climate Research
Not all borrowers will be looking at houses in unfamiliar markets, but if you are forced to look for a home in places you are unfamiliar with, do some research on the local area, how prone it is to natural disasters, and just as importantly, what the projections might be for future, climate change-associated issues. You will be very glad you did.
Commit to a Home Inspection
If you want to buy existing construction, know that in the 2022 seller’s market some zip codes experienced so much competition among buyers that some agreed to commit to a real estate loan without paying for a home inspection.
And there were buyers who agreed to that arrangement who later learned the hard way about problems with their roof, radon gas in crawl spaces, and other problems. Decide early whether you are willing to risk not getting a home inspection. Best advice? Don’t allow yourself to be pressured into buying a home you can’t have inspected.
Decide on the Right Type of Loan
What do we mean by this? Simply that if you aren’t sure what type of property you want--suburban home, condo unit, farm residence, etc. you will need to pick a property type.
There is no one-size-fits all FHA mortgage. And it’s not just whether to buy a condo unit or a mobile home; some borrowers are tempted to buy fixer-uppers and there is an FHA loan for that called the FHA 203(k) Rehabilitation Mortgage. But that kind of loan requires more planning and you will want to add some extra planning time into the process to accommodate this type of loan.
------------------------------
RELATED VIDEOS:
Learn How to Meet FHA Requirements
Understanding APR
Your Proof of Ownership Is the Property Title
Compare Prices
No, we are NOT talking about home prices, lender interest rates or home inspection fees. That is typical Home Loan 101-type advice.
There are some overlooked expenses you should not only anticipate, but compare the numbers for. The lender’s origination fee is one--how much does your home loan cost when it comes to lender fees?
Be sure to compare lender fees among several companies and be sure to ask whether there are ways to lower the fee or other closing costs to offset the fee. In some cases there may be nothing you can do except find a lender with the most reasonable fee.
Lender fees (depending on whether your loan is conventional or backed by the government like an FHA mortgage) may vary between one and two percent of the purchase price.
Decide on the Property Size Early
If you are looking for a single-unit home but might expect a change in family size due to a marriage, birth, additional housemates, or other variables, you have a dilemma. Buy a home that is smaller and less expensive, but one you could grow out of quickly?
Or commit to a larger financial commitment knowing you won’t have to do the whole process all over again in a few years? It’s an important decision.
Do Some Climate Research
Not all borrowers will be looking at houses in unfamiliar markets, but if you are forced to look for a home in places you are unfamiliar with, do some research on the local area, how prone it is to natural disasters, and just as importantly, what the projections might be for future, climate change-associated issues. You will be very glad you did.
Commit to a Home Inspection
If you want to buy existing construction, know that in the 2022 seller’s market some zip codes experienced so much competition among buyers that some agreed to commit to a real estate loan without paying for a home inspection.
And there were buyers who agreed to that arrangement who later learned the hard way about problems with their roof, radon gas in crawl spaces, and other problems. Decide early whether you are willing to risk not getting a home inspection. Best advice? Don’t allow yourself to be pressured into buying a home you can’t have inspected.
Decide on the Right Type of Loan
What do we mean by this? Simply that if you aren’t sure what type of property you want--suburban home, condo unit, farm residence, etc. you will need to pick a property type.
There is no one-size-fits all FHA mortgage. And it’s not just whether to buy a condo unit or a mobile home; some borrowers are tempted to buy fixer-uppers and there is an FHA loan for that called the FHA 203(k) Rehabilitation Mortgage. But that kind of loan requires more planning and you will want to add some extra planning time into the process to accommodate this type of loan.
------------------------------
RELATED VIDEOS:
Learn How to Meet FHA Requirements
Understanding APR
Your Proof of Ownership Is the Property Title
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