There is a wrong way and a right way (or at least a better way) to do almost anything and everything. This applies especially to buying a home because not doing it the right way can cost you a lot of money and cause a lot of heartaches. And where better to discover home-buying best practices than from experienced local agents? So check these 6 home buying tips from the most trusted real estate agents in Kauai.
1. Understand All the Costs
Many homebuyers, especially first-time buyers, get in way over their heads and buy a lot more home than they can actually afford simply because they weren’t aware or didn’t fully understand all the costs involved. The cost of buying a home goes far beyond the down payment and the monthly mortgage payments.
Here’s what industry pros recommend: “Budget for the down payment, closing costs, and other costs as early as possible . . . In addition to the 20 percent down payment (some lenders require less), origination fees are usually between 2 and 5 percent of the total loan amount, and it is crucial that you start saving early on, so you have enough cash to cover all mortgage-related payments, legal fees, as well as broker’s commission by the time you are ready to close the deal.”
Some commonly overlooked costs are:
- Reserve funds
- Private mortgage insurance
- Property taxes
- HOA fees
- Homeowners insurance
- Maintenance/repair costs
2. Forget the “Perfect Home”
Trusted real estate agents in Kauai agree that buyers should give up the search for the “perfect home.” This is a common mistake of first-time buyers, but the simple fact is . . . no such thing exists. It’s much like trying to find the perfect spouse.
Rather, as most the trusted real estate agents in Kauai often remind us, buyers need to realize that “trade-offs are par for the course. Finding a home is a lot like dating. ‘Perfect’ can be the enemy of ‘good,’ or even ‘great.’ So find something you can live with, grow into, and renovate.” Buying a home “is about compromise. As a general rule, most buyers prioritize three main things: price, size, and location.”
Still, knowing where to give up a little and the best way to compromise while meeting your needs and desires can be difficult to determine. But that’s where your local agent can be a huge help. To discover more about this, just call 808-634-4518.
3. Save for Down Payment . . . Now
Coming up with that big down payment is usually the largest financial hurdle for most home buyers. So the best course is to start saving for the down payment now – or sooner. Home prices are still increasing (though at a slower rate), and that means required down payments are also going up.
Experts explain that “you may not necessarily need a big down payment – some mortgage programs let you pay as little as 3% down. But keep in mind, the more you pay down, the better your financial situation will likely be. You need to hit 20% down to eliminate private mortgage insurance, for example, which can be challenging to do. The sooner you start saving for the down payment, the better.”
4. Get Pre-Approved
Trusted real estate agents in Kauai also advise buyers to get pre-approved for a mortgage. Pre-approval will let you know exactly how much your mortgage lender will be willing to lend you. That way, you can save a lot of time by shopping only those homes within your price range. Your pre-approval letter will also give you negotiating leverage – sellers will see you as a serious buyer because you have proof that you can get financing.
Keep in mind, though, that pre-approval is not the same thing as pre-qualification. “Getting pre-qualified for a mortgage . . . requires giving a few basic points of information. Pre-qualification is easy to acquire but is practically useless when you really want to buy a home. Sellers want-approval, not pre-qualification. Pre-approval requires going through most of the process of getting an actual mortgage. But going through all that effort gives you a letter that says you are very likely to get the mortgage as long as nothing significant changes with your credit or you lose your job.”
5. Ask for Reductions Post-Inspection
After the inspection is the time to ask for reductions and/or concessions. If the inspection turns up any exterior or interior problems, you can use that to your advantage to leverage a better deal, especially in a depressed market or if the seller needs to sell quickly.
“Home sellers often describe their property’s condition as much better than it is,” experts say. “A good inspection often reveals unanticipated defects . .. Don’t be afraid to ask for a reduction. Buyers sometimes hesitate to request a lower price due to fear of losing the house. In reality, sellers give plenty of reductions upon request — even tens of thousands below the initial offer.”
And this is the point, when you down to the nitty-gritty of negotiations, at which your agent can become a valuable asset. One of the most important things your agent brings is her negotiating expertise. Don’t miss out on this – find out more by calling 808-634-4518.
6. Choose Your Agent Carefully
You do need to keep in mind, though, that knowledgeable, experienced agents aren’t always that easy to come by. So you have to do your research and choose carefully. You are entering into a business relationship with your agent, so you need to make sure not only that she is qualified, but also that the two of you are compatible.