The 5 Basic Rules of Buying Wisely

Buying a home or investment property is usually the biggest purchase you’ll make in your lifetime. Doing your homework upfront can be the difference between becoming a successful homeowner or wasting thousands and walking away frustrated. We’ve compiled a list of five tips that will help you get into your property the right way:

• Determine Your Budget. Before you even start looking at properties, it’s important to understand what you can afford. A general rule of thumb is to allocate no more than 33% of your gross income to your monthly housing budget. Be sure to factor in principal, interest, taxes, homeowner’s insurance, and association dues (PITIA) when calculating this number.
• Get Pre-Approved for a Loan. If you’re like most people these days, you’re planning on financing your purchase. Getting pre-approved for the loan before you start looking at homes is the right way to protect your earnest money, inspection, and appraisal fees while simultaneously saving you time and money. Even though some lenders don’t offer pre-approvals, we encourage it—and many seller’s agents won’t accept your offer without it. Being pre-approved puts your (strong) offer in front of the line during a multi-offer situation, and can make the difference in getting the right house in the neighborhood you want to live in. At Global Home Finance, we have some of the most expansive set of mortgage solutions available in the US including our NINJA program for self-employed and hard-to-prove income. Our team will get you pre-approved on the front side so you’ll secure the home you want with the least amount of stress.
• Find the Right Agent. Good real estate agents can be worth their weight in gold. They know the markets they serve inside and out, and can make sure your kids are located near the right schools. Heck, they may even have a pocket listing here or there that can help you skip the home search (and the bidding wars). We recommend a full-time agent who has at least five years of experience representing buyers, ensuring they’re experts and strong negotiators who won’t leave money on the table when working on your behalf.
• Evaluate the Property. Once you’ve found your dream home, your real estate agent will help you evaluate how much to offer, usually by running a Comparative Market Analysis (CMA) to show what homes are selling for to help support your offer. For an investment property, you can request they find market rents, often called a Comparable Rent Analysis. After your offer is accepted, the realtor will recommend a home inspection and help you review the report to dig deeper into the property, including details about the condition, needed repairs, or any updates. Your realtor will then make requests to the seller’s agent for repairs, closing cost concessions by the seller in lieu of repairs, or a reduction in the sales price in lieu of repairs. Their experience with handling these situations is invaluable to a homebuyer who doesn’t deal with these situations every day.
• Think Long-Term. Remembering that a home is also an investment can be critical in deciding to buy. When you evaluate the last 100 years of data in the US, the average home price has gone up 7% per year which means in 15 years, you can double your money just based on average appreciation. Every time you make a monthly payment, you’re reducing the principal balance and it ratchets up the wealth effect. In fact, a home is the only hedge against inflation that many normal Americans have. Unless you own a large company or investment portfolio, owning a home can be your key to retirement. If you get a fixed rate, the principal and interest payments never go up (even if taxes and insurance do), allowing you to have some control over your housing expenses as time goes by. While rents go up annually in most parts of the US, being a homeowner can bring stability not only to your budget, but also keep your family in a safe, stable place for many years to come—especially when you employ our team of professionals to lead the charge for you.