Looking for a home in the warmer months means entering the market at the busiest time of the year. For many eager homebuyers, it’s easy to overlook important basics while running from house to house in search of the perfect place. But forgetting these five items could increase costs and create buyer’s remorse:
Shop for the right mortgage and rate lock. Mortgages are complicated. Rates and terms vary from lender to lender, and not every product fits the needs of every buyer. That’s why it’s important for buyers to work with a housing counselor to understand the different types of mortgage products available, and then shop for the right mortgage from a variety of lenders.
Since January, the traditional 30-year mortgage rate has moved around quite a bit, trending from a low of 4.09 percent to as high as 4.3 percent. Most experts think that mortgage rates are more likely to increase over the next few months than decline. Work with a mortgage lender who allows you to lock in your interest rate. A rate lock sets the mortgage terms and protects the buyer if mortgage rates increase before the home is actually purchased.
Remember, there could be weeks or even a few months between when an offer to buy a home is accepted and the home is sold, and locking in a mortgage rate helps assure a buyer stays within her mortgage budget.
Importantly, not all lenders offer the same mortgage rate lock terms, so shop around to find a lender who will offer the most flexible options, including the ability to reduce your agreed-upon mortgage rate if prevailing rates have declined since you locked in the terms. This type of flexibility can be complicated, so work closely with your lender and housing counselor to understand the pluses and the minuses.
Pay attention to homeowners association documents. More than one out of five people live under a homeowners association, and there’s a good chance that if you’re buying a home this year, you’re joining the more than the 68 million people who already live under the rules of a homeowners association.
Operating primarily to ensure uniformity of design and maintenance standards, such as the type of storm door an owner can install or which siding color choice would be approved, HOA regulations are usually benign. However, some rules can be surprising. For example, some HOAs don’t allow an owner to erect structures on his property like tool sheds, above ground pools or certain types of backyard decks. Discovering these and other restrictions after purchasing the home can be frustrating. To help avoid surprises, buyers should ask early on if the home they’re considering is in an HOA. If so, be sure to read the HOA documents carefully.
Take a look at county development plans. Development is exploding in many suburban communities and once quiet, two-lane roads have become four-lane speedways. If the prospect of living close to a busy road isn’t appealing, it’s recommended that buyers review longer-term development plans that are under consideration by the county where the prospective home is located.
Local governments plan road improvements, new commercial construction and other development years in advance. Checking with the local government can uncover plans that may substantially alter today’s desirable, quiet neighborhood into something very different in just a few years. Ask your real estate agent to research county planning documents or visit the National Association of Counties for a list of counties and contact information to do it yourself.
Shop around for homeowner’s insurance. Every buyer who has a mortgage has to hold homeowners insurance. The insurance protects the homeowner from various losses, and assures that the lender’s collateral – the home – is protected, too. Most often, a homebuyer arranges homeowners insurance through the mortgage lender. However, shopping around can save money, especially if a buyer is bundling his or her insurance with auto insurance from the same provider.
Savings from bundling vary and bundling is not always less expensive than buying policies from different insurers. A housing counselor or lender would be best equipped to help you research options.
Get the best deal for movers. There’s no way to avoid it. Buying a home in the peak season – between May and September – generally means that you’ll pay more than other times of the year for professional movers. Although it doesn’t make too much sense to delay buying a home to avoid peak moving season, it does make sense to shop around for the best rate.
Make sure that the moving company you select provides an accurate estimate based on your home and your belongings. Don’t settle for an estimate over the phone based solely on the square footage of your home and the number of bedrooms. Real world factors such as the weight of your furniture (think pool table versus ping-pong table), the number of stairs in your home, the width of your hallways and more, can affect the cost of moving.
There are several types of estimates that a moving company provides. The main estimates are classified as binding, non-binding and not-to-exceed. Each one has its pros and cons. Understand the details of each and then shop around multiple moving companies for the best price. Other tips for consumers ready for their next housing move can be found at the American Moving and Storage Association website.
Buying a home involves many different types of choices. Paying attention to these could save you money and time.