Real Estate Tips for Buyers: Get Ready for your First Homebuying Experience12 June 2022
Purchasing your first home is an exhilarating experience- not to mention a little crazy as you need to consider a lot of things. You may be tempted to make a purchase as soon as possible in order to avoid things getting even more out of hand. Slow down, but don't stop!
Buying your first house in the proper manner is worth the effort, this is proven and tested by many home investors and homebuyers. That means choosing a plan that works in harmony with your financial goals and not against them.
For those real estate buyers who find it difficult to navigate a sea of information, we just want you to know that you are not alone. To tell the truth, around 75% of first-time homebuyers say they are intimidated by the procedure, according to new research.
So we gathered some of the greatest advice from real estate professionals to lead us through some of the best recommendations for buyers in high hopes that these will be helpful for your smooth home buying process.
Homebuying tips from financing to closing costs process
So the time has come for you to put your money where your mouth is and become a homeowner. Yes, it's an exciting new chapter in one's life.
With so many steps to take, like hiring an agent and acquiring a mortgage, and making offers, it may be difficult to keep track of it all. If only there was a comprehensive list of real estate suggestions for buyers to aid you through the process, wouldn't that be wonderful? And since we heard your silent call, here are the things that you need to know before purchasing a property:
Before swiping through ads on the internet or falling in love with a house, do a thorough financial assessment. In order to afford a house, you'll have to budget for both the initial purchase and continuing maintenance. In addition, it's crucial to know how much money a lender will provide you to buy your first house.
During your journey, there's a big possibility that you will encounter many real estate brokers who refuse to spend time with customers who have not specified how much they can afford to spend on a home upfront. Not to mention that in the long run, getting a mortgage may be tedious and draining. You can get ahead of the game and handle your mortgage like a pro by following this advice:
Home Financing Tip #1. Set your homebuying budget with the use of a calculator.
An approximate estimate of your monthly housing expenses should be made before visiting a lender to begin the mortgage application process.
There's a lot to keep track of, including your monthly mortgage payment, property taxes, homeowner's insurance, utility bills, HOA dues, and other upkeep costs as well. Although it all seems to be adding up, there's no reason to freak out. In order to ensure that you can afford to buy a new house, use a simple home affordability calculator.
Keep in mind that this house and lot budget may not be precisely what you qualify for when you acquire a mortgage, but you may get an idea of what to anticipate.
Home Financing Tip #2. Accept that you may not get easily approved by financing institutions
How lenders calculate income is the key to how much individuals believe they can afford or qualify for, and it's a lot more complicated than that.
When it comes to securing a mortgage, lenders may not always be able to use your existing salary as a factor. As a rule, they prefer a steady flow of money versus one that fluctuates. In other words, they're looking for some assurance that you'll be able to make your mortgage payments for the next 30 years.
Home Financing Tip #3. Keep in mind the closing costs while making your budget.
Closing costs are one-time expenses that accompany the purchase of a house, and they are due on the day of closing and they may really pile up, as well. Closing expenses may range from 2 percent to 5 percent of the entire loan amount, and they must be paid in cash through wire transfer or cashier's check in most cases. Third-party expenses like transfer taxes, escrow fees, the appraisal, homeowner's insurance, and more are included in the costs.
Despite the fact that these expenditures are a part of every house purchase, around half of purchasers are taken completely by surprise when it comes time to close the agreement on the sale.
Home Financing Tip #4. Some closing expenses may be negotiated.
For those who aren't aware, some of your closing fees may be negotiated as well.
For the house inspection, title, and settlement services as well as private mortgage insurance, you have the option to compare rates from many providers. You may be able to save money on closing expenses if you deal with a company that the lender prefers.
You may perform this homework in advance and save yourself a lot of time. When looking for a lender, be sure to find out how much they charge in lender fees and compare notes when you obtain a Loan Estimate for the best loan possibilities.
Home Financing Tip #5. If you shop around for a mortgage, you may save a lot of money.
Choosing a lender is a crucial step in the process of securing a loan, since it may save you money in the long run. In fact, just around half of the homebuyers do this, so you'll be a step ahead of the competition.
Although it may not seem like much, saving 0.17 percent on your interest rate may have a major impact over time, particularly when the money can be put to better use elsewhere. For example, making value-enhancing home upgrades, putting it into a retirement fund, or investing in your future house.
Home Financing Tip #6. What if you'd want to save even more money on your mortgage? Then Rebuild your credit rating!
One of the most important factors in determining your mortgage rate is your credit report score. By far the most significant expense of a mortgage is the interest rate you'll pay to the lender during the life of the loan.
The claimed reduced rates aren't what they seem to be. Certain borrowers must fulfill stringent credit, income, and down payment requirements before they may apply for them. If your credit score is poor, you'll certainly pay a higher interest rate on a mortgage, and you may even have fewer lending possibilities. Your mortgage costs will be lower if you have a good credit score, which may save you thousands over the life of the loan.
In order to get a low mortgage rate and save money, you'll need to enhance your credit rating and address any unfavorable aspects that may be affecting your score.
Searching for a home
Single-family homes, duplexes, and townhouses, condominiums, and rowhouses as well as two to four-unit multifamily buildings are all viable alternatives when it comes to owning a home in the Philippines. It's important to weigh the benefits and drawbacks of each choice in light of your long-term objectives as a homeowner before making a final decision.
While it's important to include some wiggle room on your list, you're about to make one of the greatest purchases of your life, and you deserve to have that purchase meet your requirements and desires as precisely as possible. Below are some tips that you can apply in searching for your dream home:
Home Search Tip #1. Choose a location first.
You can't relocate a house. For this, you'll need to decide where you want to reside first. If you don't like where you live, there's nothing you can do to alter it. This is the reason why real estate experts recommend focusing first on the location you want to buy in, and then determining what you want and need in a house.
Home Search Tip #2. Reduce the number of choices you have to make.
The next step is to think about the property and how you want to utilize and develop it after you've chosen a location. You might want to consider these questions in order to figure this out:
- What kind of house are you looking for? Historic or modular? Ranch? Can you live in an ultra-compact dwelling?
- How much room do you need?? Do you know how many bedrooms you need in your home? How about for the bathrooms? Is a home office something you really want? Would you consider making this your child's bedroom or anything similar? Is there a place to store your enormous figure collection?
- Yard size and land are other important considerations. Do you prefer a small yard with a low-maintenance patio and xeriscaping, or do you prefer a large yard that requires more work?
- Which neighborhood are you aiming for? Regardless of whether or not they meet all of your criteria, are you open to the possibility of moving to a different, more inexpensive area down the road?
- What do you want to be close to? Do you want to save time getting to work? Is it close to stores and restaurants? Is the location convenient to nearby public schools? Is there a place of worship nearby?
- Do you want a fixer-upper or do you want a move-in-ready home? How enthusiastic are you about new challenges?
With the support of a real estate agent, you'll be able to answer these questions and focus on what matters most. However, having a general notion of what you're looking for is a good place to start.
Home Search Tip #3. Set up a strategy when looking for a home.
Buying a home may be a stressful experience. There are a zillion little things to remember! Keeping track of what you like and don't like about each house is essential, so having a method to do so is helpful.
Make sure you maintain a list of things to look for in a property handy. If you want to keep track of all the houses you've looked at in an extremely complicated .xls spreadsheet, it is also absolutely okay and understandable, too.
Home Search Tip #4. check to see whether it fits within your Homebuying financial parameters
The temptation to overextend your financial resources is a strong one, so avoid it. Just because your lender says you can afford a certain amount of money doesn't imply you should spend it!
Your DTI, or debt-to-income ratio which is how much you pay toward debt each month versus how much you actually make, is what your lender is most concerned with when evaluating your application for a loan. Typically, lenders want a DTI of 43 percent or less, which means that no more than 43 percent of your monthly income should be spent on debt payments including your monthly mortgage payments.
A DTI of 43% may make sense for certain purchasers, particularly those in pricey regions, but for others, a lower DTI is the better choice. A trustworthy financial advisor can help you figure out how much money you can afford to spend for your purchase price or monthly payments and how much money you can save on your conventional loans.
Home Search Tip #5. Spread your network as broadly as you can.
Try to attend as many open houses as possible. In fact, even virtual ones can work. Then make sure you're looking in all the right places when it comes to finding your dream home. When you visit a house in person, you may be pleasantly surprised or learn something about your preferences that you wouldn't have discovered from a simple online search.
Home Search Tip #6. Examine your own growth as a resident of your new home.
After then, we're looking at yet another major milestone. Of course, consider how you'll utilize the house today to fit your current lifestyle. It's also crucial to consider about how you'll adapt to the house as you mature.
In the future, do you want to grow your household, or possibly create a home-based business? Your future house should be able to suit all of your life's aspirations, so plan ahead. Even if you decide to upgrade in the future, you've undoubtedly realized by now that purchasing a property is neither cheap nor simple. There are occasions when you might benefit from purchasing a product today that you can grow into in the near future.
Make a list of things you want to do in the following five to ten years. Are you happy with the way you spend your time? Is this house going to fit into your life? The knowledge and experience of your realtor will come in handy here as well as they can help you strike a balance between buying something that's right for you and your budget now and finding something you can grow into in the future.
Hiring a real estate agent or a real estate professional
A real estate agent can assist you in locating houses that are both suitable for your requirements and within your budget, and they can then arrange for you to go see them in person. Once you've decided on a house, these experts can help you with every step of the purchasing process, from making an offer to securing a financing to completing the necessary paperwork. You may rely on a knowledgeable real estate agent to keep you out of any potential problems.
Here are some of the tips when hiring real estate agents for your real estate market journey:
Hiring an agent tip #1. Don't miss out on hiring a real estate agent.
An agent's role is to protect your interests and save you money while you navigate the complexities of the home-buying process. Isn't it the best? You don't even have to foot the bill for them! Sellers typically pay buyer agents' commissions in most circumstances. This is the reason why hiring or working with a real estate agent is a no-brainer for house hunting and first-time buyers.
Hiring an agent tip #2. You should also do your own research.
That being said, there's a huge difference between a top real estate agent who closes transactions fast and saves their client's money, and a part-time agent who's just in the business to earn some extra cash. So, make sure you get the correct individual on the job.
Hiring an agent tip #3. Stay with a full-time agent who is at the top of his or her field.
Here are a few things to keep an eye out for while interviewing prospective real estate brokers:
You want to work with a full-time agent, and ideally someone who has been in the industry for a long time or is working with someone who has.
The number of transactions they have done in your region over the last year should be checked. If they only have less than five closed deal clients, then you may choose to exclude them from your diet.
Your real estate agent should be able to show via their results that they have saved previous purchasers money and expedited the closing process by closing a large number of agreements.
Check to see whether the real estate agent is familiar with the area you're looking to buy in. They'll have access to information that others won't have access to.
In addition, your agent should have specialized expertise that is tailored to match your individual requirements. Is this your first time buying a home? Your real estate agent should be able to speak the language of first-time homebuyers. Considering purchasing a foreclosed property? It's important to work with an agent who specializes in them and is familiar with the procedure.
There are many people in the sector that an excellent agent may connect with. It's important to know whether your prospective real estate agent has access to a seemingly limitless list of the area's top lenders, contractors, inspectors, and property managers. They're probably the best they can be.
Hiring an agent tip #4. Obtain the names and contact information of past clients.
Avoid hiring a real estate agent until you've gotten many recommendations. Be careful to double-check your sources, too. If it's embarrassing, so be it, but it's not as bad as having to terminate your agent later because they weren't a good match.
Hiring an agent tip #5. Provide your expectations.
Because you'll be working closely with a real estate agent over the following several months, it's critical that you establish clear expectations and ground rules from the start.
Talk to your agent about how you would want to interact and collaborate with each other. Is it easier to communicate with someone by text, email, or a brief phone call? Which hours of the day are the most convenient for you to react to your agent? What's the best frequency for you to get updates from them? How many agents will you have to deal with in order to get the job done?
Be honest with the real estate agent if there are times or dates when you are unavailable or unable to be reached. The more open you are about your availability and preferences, the better your working relationship will be.
Hiring an agent tip #6. It is critical to have a good chemistry between you and the agent of your choice.
Over the following three months, you'll be spending a lot of time with your agent. Ascertain whether or not the two of you are compatible on a personal level. It's not necessary to be best friends with your agent, but getting along well with him or her will make the home-buying experience more pleasurable.
For example, you could prefer an agent or real state broker that keeps things professional and doesn't engage in small talk with clients. Alternatively, you may be in need of somebody who is meticulously organized and will ensure that all of your lender paperwork is completed on time. For whatever your requirements are, make sure you engage with a real estate agent that has the personality and work style to match.
In order to save you up from all the troubles and worries of verifying if you really hire a legit real estate agent or real estate professional, you can resort to buying from a trusted house and lot provider.
Lumina Homes already made a name in the real estate market and is also one of the most trusted brands of community developers in the Philippines. We have real estate agents and real estate professional to help you and guide you out throughout your home buying journey from the moment that you make your home reservations, assessing your personal finance, finding the ideal interest rates for your homeowners insurances as well as home loan, our account officers are always here to help you out!
The Home Purchase
Let's take a look at what you may anticipate from the homebuying process now that you've chosen to take the leap. There will likely be a flurry of offers and counteroffers, but if you're ready for the headache and the paperwork involved in your house shopping journey, you can go through the process unscathed.
Here are some of the tips to boost your confidence when buying a house and lot in real estate trends:
Buying a house tip #1. Be ready to take action fast if necessary.
On the street of your dreams, you've always wanted a craftsman-style home with three bedrooms and two bathrooms, and a picture-perfect backyard. No doubt, you're not the only one taken aback by her charms. That implies that efficiency is critical when you are buying a house.
If you've done your homework up front by determining your budget, obtaining preapproval, and restricting your search for a property, you'll be well-prepared to make an aggressive offer. Be ready to react quickly if the need arises. You don't want to miss out on your ideal house because you were unsure.
Buying a house tip #2. Make sure to have a home inspection contingency in place.
In most cases, you'll want to have a property examined prior to making an offer on it. The inspector will check at the systems, the foundation, and the main components of the house, such as the roof and walls, to ensure that it is safe and does not need substantial repairs.
An inspection contingency or a good faith deposit is often included in a house offer, and it essentially states that you may back out of the purchase if anything important is discovered during the inspection process. As tempting as it may be, it's best to avoid removing a buyer's inspection contingency in order to make the contract more attractive to the seller.
Sellers, of course, like a transaction that doesn't need an inspection. To them, it's all about getting the deal done in the fastest, most profitable way possible; they have nothing to lose by skipping the inspection. The buyer is at a significant disadvantage if the inspection is waived. If you don't have a home inspection, you won't know what repairs are required and how much they'll cost you if you decide to buy a house without it. Negotiations should not take place during the inspection. With fewer hazardous options, you may make an even more competitive offer.
Buying a house tip #3. Add some earnest money to the deal.
In order to demonstrate to the seller you're serious about acquiring the property, you'll put down an earnest money deposit. There are certain marketplaces where earnest money deposits don't exceed 3% of the buying price. Deposits of up to 10% of the buying price might be required in very competitive markets.
Earnest money should be increased to demonstrate the seller that you are serious about purchasing their property. This may demonstrate your great interest in the property and decrease the risk to the seller that you'll withdraw out of the agreement for reasons other than those mentioned in your purchase contract.
Buying a house tip #4. Think about adding an escalation provision to your contract.
An escalation clause may be a major benefit for purchasers who know what they're doing when it comes to bidding on a house. Many times, you may utilize an escalation clause to ensure that you don't overpay for the property purchase price you get.
It's a safety net for the home buyers, kind of. There are other offers out there, and if they don't want to lose their home but don't want to spend too much, this is a wonderful option to go in.
Buying a house tip #5. Allow the seller some wiggle room in terms of when they can close the deal.
Accepting the seller's timeframe is another strategy to improve the appeal of your offer. Selling a house is like playing a game of musical chairs: The seller generally has to purchase and sell a house at the same time, which is a lot to handle. The more flexible you can be with your timeframe, the better off you'll be with a vendor.
You could have to wait a little longer to move into your new home, rent the house back to the seller for a few months so they can find a new place, or agree to a certain closing date specified by the seller – as long as your lender can make it happen! Of course, this isn't going to work for every home buying experience. Your agent should get to know the seller and find out what's essential to them and how you can best meet their demands in your offer.
Buying a house tip #6. Instead of credit cards, consider using cash.
If you're in a competitive market and need a major push, an all-cash offer is your best option. But if you are short in cash but have the financial capacity to pay a financial home loan, or mortgage loan, from mortgage lenders, you can choose a home provider that offers flexible payment method for your home financing scheme.
Lumina Homes offer this kind of payment scheme in which homebuyers can choose different payment options that are best for their needs and financial health such as bank financing. The good thing about Lumina is that we will help you in processing your application for a home loan and all you have to do is to submit the necessary requirements to the assigned accounts officer for you.
With this program, you may make a better offer with cash and yet obtain the substantial long-term advantages of a mortgage. This program provides you the utmost buying power.
Buying a house tip #7. Make sure you're familiar with the effects of days-on-market or DOM.
The number of days on market might be an important consideration when developing your offer strategy. This is a statistic that measures how long a house has been on the market until a buyer comes along and takes it off the market. Homes that are on the market for an extended period of time tend to be more flexible. Meanwhile, homes that have recently gone on the market, especially those that have attracted a lot of attention, are significantly less likely to be open to offers.
People who recently went on the market are always going to be hopeful, so there's no use in lowering their price. There are instances when going in at list price or over list price is necessary to beat out the competition for a property you truly want and you believe is priced well is the right move.
On the other side, if a house has been on the market for more than 100 days, you may be able to offer substantially below the asking price and save money.
Buying a house tip #8. Personalize your message by writing a letter of intent to the seller.
Top real estate professionals advocate drafting a letter to the seller as a way to personalize your offer when the market is crowded. In the event of several bids, it is imperative that you address the seller by name in your letter of offer. Tell them how much you like the house and why your offer is so low, and even tell them a little about yourself and your plans for the property.
When numerous bids are pouring in at about the same price, the letter might build an emotional connection and encourage the seller to pick your bid from among the others.
Be aware that these letters may be discouraged in certain areas, so be careful to check with your agent before using this kind of marketing. Make sure that the letter is personal, but not too personal, and that it's well-written. It's important to remember that you don't want the vendor to use any of the personal or financial information you gave them in writing against you.
Closing the deal
With an agreement in place, or even better, with no major issues found during your inspection—you should be ready to close. At the end of the day, the closing process is nothing more than a mad dash to sign as much documentation as possible in as little time as possible.
As your purchase nears completion, you'll have to deal with and pay for a variety of issues, including having the home appraised, conducting a title search to make sure that no one other than the seller has a claim to the property, obtaining private mortgage insurance or a piggyback loan if your down payment is less than 20%, and completing mortgage paperwork. Loan origination expenses, title insurance, surveys, taxes, and charges for credit reports may all be included in the final closing price as well.
Below are some of the tips that you might want to consider when you are already in the process of closing a deal with home sellers:
Closing a deal tip #1. Make sure to attend the home inspection if you can.
Technically, you don't need to be there for the house inspection since your agent will be there to act as your ears and eyes. It's possible to benefit from this experience if you can make it. Following their thorough inspection, the inspector will be available to answer any concerns you may have and demonstrate any faults they have discovered. It's an excellent chance to learn more about your future home!
In the event that you are unable to attend the inspection, make sure that your agent takes extensive notes and possibly even video-calls you for the inspection findings so that you do not miss any important information.
Closing a deal tip #2. Ensure the safety of your house with adequate homeowners insurance coverage.
Purchase of homeowner's insurance is a requirement for taking out a loan. As it happens, mortgage lenders require homebuyers to have home insurance. Even if you didn't have to get insurance, it's still a good idea to safeguard your largest investment.
Just like the mortgage annual percentage rate, homeowners insurance rates vary depending on the financing institution or mortgage lender like banks that you would like to have.
Closing a deal tip #3. Getting a Title insurance is also essential when buying a house.
Title insurance safeguards your ownership of the house in the event that a long-lost relative of a former owner, or a bank claiming there is an outstanding debt on the property, chooses to make a claim on the property.
The seller normally pays for the buyer's title insurance, but you'll have to pay for your lender's title insurance. Expect to spend between 0.5 percent and 1 percent of the home's purchase price for your mortgage company coverage. In the same way that you may save money by shopping around for homeowner's insurance, you can save money by shopping around for title insurance as well.
Closing a deal tip #4. Do not make any large purchases right away.
To ensure that nothing has changed since you initially applied for the loan, your lender will likely do a final credit check before you close on your new house. You might lose your home loan if you make a large purchase or fail to pay your bill. To ensure a smooth closing, make sure your funds are in tip-top form throughout the lending procedure to pay your mortgage programs from the local lender, monthly payment, as well as your loan interest rate.
Closing a deal tip #5. Take caution not to leave your current job mid-loan repayment.
Job offers may occur, but it's not always wise to change employment during the final stages of a deal's negotiation. It's important to remember that your lender is looking for a regular, reliable source of income. It's possible that your lender may consider your mortgage as a danger if you're taking an unconventional professional path. As a result, it is highly dependent on the direction in which you choose to take your professional life.
Your loan may not be impacted if you are promoted to a comparable or better position within your sector and will be earning the same or more money there. Changes in employment status, such as going from a salary to a lower contractor status, may have an adverse effect on your ability to get a job with the company.
A job change during the closing process may put your loan in jeopardy, so check with your mortgage broker before making a decision like that.
Closing a deal tip #5. Make sure you return all of the required paperwork to your lender as soon as possible.
You'll be asked to sign and submit many paperwork by your mortgage broker throughout the closing process including property tax rates. As soon as you get those paperwork back to them, filled out correctly and properly, you'll be able to close more quickly.
If, on the other hand, you wait several days to respond to your lender after they require a signature, you may cause a delay in the closing process. Always be on top of lender requirements and respond quickly!
Closing a deal tip #6. Preparation is the key to a successful utility transfer.
When you move into your new home, the last thing you want is for water or power to go out. As quickly as feasible, transfer the utilities to an account in your name. This is an area in which your agent may be able to provide assistance. They should be able to offer you with a list of utility providers, account numbers for prior owners, and phone numbers to contact in order to have everything transferred over. Check this out before you move in, or you'll be slapped with a surprise bill.
When purchasing a house and lot for sale in Lumina Homes, you don't have to worry about your electricity and water application as this is automatically included in your homebuying process! Plus, an accounts officer will be always available to help you in your application all throughout the process.
Make your home reservations now and Pay LESS, Get More in your homebuying journey with FREE Water Application Fee, FREE Electric Application Fee, FREE HOA Membership Fee, FREE Loan Processing, FREE Title Processing, Longer Downpayment Term, and Lower Monthly Downpayment!
Closing a deal tip #7. it's important to do the walkthrough.
The final walkthrough is your last opportunity to verify that the seller has left the house in perfect condition and that everything is in order. During the inspection, your agent will assist you in verifying that all agreed-upon repairs have been done and that everything included in the transaction is still present on the property.
You should also check to make sure that the seller hasn't left behind any garbage or personal stuff for you to deal with. Make sure you don't miss this step. Everything must go well for it to be a happy event. It is, after all, a huge affair. YAY! You can finally start your homeownership experience!
Buying a home is definitely not a stroll in a park, particularly for first-time homebuyers. Skip all these tedious things and purchase a house and lot from Lumina Homes that can guarantee you a #BahayGoals homebuying process and homeowning experience.
You can watch our Lumina Sessions from our official YouTube Channel or watch Vlogs to get more tips about home buying process or visit our website to make your Lumina home reservations now!
Try Lumina Homes' loan calculator and get an estimate computation for your preferred Lumina property and home model.