10 Easy Ways to Protect Yourself Before You Buy a Home

Owning a home is the American dream, but for some people, taking that home away and making big money is what they dream about. I want to share with you 10 ways you can buy smarter and put yourself in position to fight off the banks and everyone else that wants to take your home away from you.

10. Understand the purchasing process.

Buying a home is not like buying a cocktail dress or a suit. It’s not even like buying a car. Buying a home is an investment all to itself. Whether you are planning to make the house your permanent home or use real estate as an investment, you need to know how to buy. One of the most important things is to find your own real estate agent. This may sound like a hassle, but if you only work with the agent selling the house, you need to know that they are not working for you. Any agent selling a house is working for the owner of the house. They want the biggest possible commission. Your real estate agent works for you and will help you get the best deal.

9. Find out the true value of a house and how much outside factors can influence that value.

This is another reason it is important to hire your own real estate agent. The agent selling the house may have appraised it already, but that could be an inflated estimate made by a handpicked appraiser. Get your own agent and get the house appraised by an independent organization or one that works for you. You must also understand that the neighborhood you’re moving into may be improving or it may be on the decline. These and other factors can greatly influence the value of your home in the future.

8. Hire real estate agents and home inspectors wisely; find someone you trust.

Don’t just hire anybody. If you know a relative or a family friend or even a personal acquaintance, have them represent you; don’t just go through the yellow pages. An agent, appraiser and home inspector can find you a better home at a better price and get you a better mortgage. All of those things will help you not only get a better home and mortgage, but also make sure you stay away from shady lenders and bad deals.

7. Know the terms of the contract before you sign.

Another important step is to make sure you understand what you’re paying for. Understand all the terms of your loan – is it a fixed rate, adjustable rate, balloon rate, etc.? All of these terms mean different things and could end up costing you hundreds of thousands of dollars and allowing the bank to take your home. Make sure you know everything before you sign on the dotted line. If a deal sounds too good to be true, it probably is.

6. Get familiar with the term “subject to buyer's attorney's approval.”

This step is even more important than finding a real estate agent that you can trust, because a good lawyer can save you from something an agent may have missed. Find a good lawyer that you know and trust and have them go over your mortgage. You never know what a real estate agent may sneak into a contract at the last minute. Even if you sign a contract, if your lawyer looks at it and finds something he or she doesn’t like, the deal is off and you can renegotiate. Make sure to include this detail on any mortgage that you sign. Don’t let anyone talk you out of this.

5. Take control of your relationship with real estate agents.

Once you have hired your own real estate agent to negotiate with the estate’s agent, make sure you stay in control. You might not be able to be present at every meeting they have, but you always want to be in the loop. If you have hired someone you trust and not some name from the yellow pages, you can rest a little easier, but always let it be known that this is your home and your money.

4. Learn about down payment assistance programs.

The Federal Housing Administration (FHA) provides a number of grants to potential homeowners to help increase their down payment and lower their monthly mortgage payments. Programs like Ameridream, Nehemiah, American Family Funds and dozens more are offered through private organizations in conjunction with the FHA to give homeowners thousands of dollars that never needs to be repaid so they can buy a home. A lot of these programs also offer money for closing costs.

Obviously many of us don’t have $20,000 - $30,000 just sitting around waiting for us. That’s why these programs were created.

3. Make use of government programs.

In addition to the down payment assistance programs there are also first time homeowner programs, homeownership grants, future home assistance and a number of government programs to help fight foreclosure. The entire FHA and Housing and US Department of Housing and Urban Development (HUD) wings of the government are basically there to help you buy and keep your home. Use them.

2. Be patient

It’s not just about getting a good deal. Right now the housing market has still not recovered. In addition to prices continuing to drop, there are also a number of foreclosed homes that banks are just holding onto waiting for the economy to improve. Eventually they’re going to have to sell those homes.

Right now, you have the worm and there are lots and lots of fish out there looking for a meal. Remember that.

1. Know the right time to buy.

You want to understand real estate and that’s why you’re reading this. When I say now is the time to buy, I mean right now. This may not be true six months from now. Be aware of the national real estate cycle and your local real estate cycle. In California, 2009 was a great time to buy because the housing values there had fallen dramatically. In Texas, 2009 was not a great time to buy, but 2011 is. Different markets have different bubbles and you need to be aware of these before you invest your hard earned money in real estate.

Real Estate Mike is host of the syndicated radio show, “Let’s Talk Real Estate with Mike Andrews.” He is a published author, real estate expert, entrepreneur and investment advisor. Follow him on Twitter Twitter.com/RealEstateMikeA.