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I am simply elaborating on the previous posts. As you can see, everybody is generally in agreement, so all I am providing are some additional details.
Get a buyers agent. This will cost you nothing, as the buyers agent is paid by splitting the sales commission of the house. As a simplified example, if you buy a $100,000 house, the seller pays a $6,000 commission. If you have a buyers agent, each agent gets $3,000. If you don't have an agent, the sellers agent gets $6,000. Don't try and get cute, asking to buy the house for $97,000 if you don't have an agent. It won't work, the sellers agent will get the whole amount.
Don't sign a non-rescindible representation agreement. If you don't like the agent, you want to be able to get out of the agreement with a simple notice.
Watch out for anything that says you guarantee the agent a certain commission. In the case of a 5% split, slightly lower than my example above, the buyers agent will come to you for $. Don't agree to any fees, charges, etc.
Now that you have a free professional working for you, use their advice, which will probably be:
Get qualified for a loan. You probably want to use one company only, because using multiple brokers/banks may result in too many credit checks, resulting in a declining credit score, resulting in higher rates or a denial.
Now you know what you can theoretically get for a mortgage. Buy for less than that. Maxing out your mortgage is usually an excercise in doom, as every dime you make after buying food will go into your house. You will be stretched for credit, so you won't be able to finance a car for years.
Look for houses.
You will spend money along the way. A home inspector will cost you a few hundred dollars, an appraisal a few hundred more. The one time I used an attorney it was a flat fee and paid at closing. I think it was about $1000-$1500.
Get qualified for a loan. You probably want to use one company only, because using multiple brokers/banks may result in too many credit checks, resulting in a declining credit score, resulting in higher rates or a denial.
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I just wanted to point out to those "rate shopping" that this is not entirely accurate. There is a 14 day window (I think, check with your lender) where you can shop for rates at various institutions and its considered ONE loan, so you only take the credit hit (which is small) once. But you have to do your rate shopping within this window.
I just wanted to point out to those "rate shopping" that this is not entirely accurate. There is a 14 day window (I think, check with your lender) where you can shop for rates at various institutions and its considered ONE loan, so you only take the credit hit (which is small) once. But you have to do your rate shopping within this window.
Thanks for the clarification. I did say "may" effect credit score, as I wasn't positive. It does sound like it is ok to shop aroind s bit as long as you do it within some strict guidelines.
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