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Preapproval can save you from the heartbreak of looking at houses you can’t afford. It can also put you in a better position to make a strong offer when you find the right home. Do not confuse pre-approval with prequalification, which is usually just a superficial review of your finances. In comparison, preapproval from a lender is based on your debt, credit history and actual income.
9. Don't submit an offer until you've done your homework
The first offer you make should be based on comparables – or the sales trend of similar homes in the same neighborhood. So before you make an offer, check out the sales of similar homes in the past three months. The reason why this is important is because if you were to learn that they recently sold at 5% less than their asking prices, you could make a bid that's maybe 8% to 10% lower than what the seller is asking and then negotiate from there.
10. Be sure to get a home inspection
A home inspection typically costs from $150 to $225. This could be the best $150 or $225 you ever spend as it could turn up problems such as mold or foundation issues that you might not ever be able to spot on your own. The best home inspectors are engineers who have experience doing home inspections in the area where you would be buying. Don't confuse a home inspection with a home appraisal. A home appraisal is just how the bank determines whether or not the house is worth the price you've agreed to pay. It has nothing to do with the condition of the house, which is what a home inspection is all about. The last thing you want to do is tie up 30% or more of your monthly income in a house only to find that it will require thousands of dollars in repairs. Plus, a home inspection can turn into a good bargaining chip. For example, if it were to discover problems with the foundation or structure or with drainage or the roof, you could probably use this information to extract price concessions from the seller.