Use online calculators to estimate your monthly mortgage payment. For example, a $160,000 loan at 4% interest will cost about $764 each month. Your mortgage shouldn’t be more than 31% of your monthly income, and your total debt to income ratio shouldn’t exceed 43%.
You can also set up alerts at some of these websites. You’ll enter your criteria, and then receive an email whenever a townhouse that matches that criteria comes onto the market.
You can find an agent in your telephone book or online. Also ask friends or family if they would recommend any agent they have used in the past. [3] X Research source
Townhouses share one or more walls with neighbors. If these neighbors are noisy, then you could be in for an uncomfortable stay in your new home. Many townhouses are governed by homeowner associations (HOAs), which might place restrictions on what you can do. For example, an HOA can prohibit you from having a pet or remodeling your townhouse. HOAs also charge annual fees. [4] X Research source You may be responsible for the upkeep of any personal, non-communal outdoor areas. If you don’t want any maintenance responsibilities, then you should consider a condo.
Check if you can hear any noise coming through the walls. If the townhouse has been properly insulated, then noise should be minimal. Also take a peek at the yard. You’ll probably be responsible for upkeep. [5] X Research source Consider whether you are happy with the property as is or if you want to renovate.
Check how much the owner regularly pays for utilities. [6] X Research source This amount will impact whether you can afford the property. Ask whether there are any restrictions on renovating.
Check your credit score and get copies of your credit report. Go through your credit report to see if there are any errors. For example, someone else’s debts might be listed on your report because they have a similar name or Social Security number. Dispute any wrong information. The best way to improve your credit is to pay down debt. Consider whether you need to delay buying your townhouse until you improve your credit score. [7] X Research source
Work only with lenders who have experience underwriting loans for townhouses. Some lenders don’t know how to classify townhouses and consider them condos. [9] X Research source However, the difference between a townhouse and a condo is that a condo has no land attached to it, whereas a townhouse includes the land under and around it as specific in the lot map. A townhouse includes the land in its value, but a condo has no land as part of its value. If you’re approved, you’ll receive an approval letter which is good for only 90 days. Plan your house hunting accordingly.
Also check how much comparable homes have sold for. If you have a real estate agent, they can do a Comparative Market Analysis. However, you can also check websites such as Zillow and Trulia yourself to see what similar townhouses have fetched. [10] X Research source
In a hot market, make your first offer your best one. You probably won’t have a chance to negotiate. Don’t forget you’ll need to give the seller earnest money, which is around 1-2% of the purchase price. This money shows that you are serious about buying the house. [11] X Research source
A purchase offer is legally binding if accepted, so be sure it includes all necessary information. Even if you don’t have a lawyer draft it, ask one to review it. [12] X Research source If you need to sell your home to buy the townhouse, include a contingency to that effect.
You can expect sellers to claim that there is another buyer interested in the property. Trust your research. If the home has been on the market 120 days, it’s unlikely a second buyer suddenly appeared at the same time you did. If you increase your bid, don’t go too high. You still need to be able to afford your house.
You can expect sellers to claim that there is another buyer interested in the property. Trust your research. If the home has been on the market 120 days, it’s unlikely a second buyer suddenly appeared at the same time you did. If you increase your bid, don’t go too high. You still need to be able to afford your house.
The appraiser will take photos and send those to the underwriter along with their report. The underwriter is in charge of approving the loan, so any issues may delay approval. In some cases, a rehab loan may be required to move forward. If the inspection uncovers problems, then discuss with the seller how to handle them. You can ask the seller to repair the problem before closing, or you can ask for a credit that will be applied against the purchase price. Depending on your contract, you might also be able to walk away from the purchase. Your lender will be interested in the appraisal, since they won’t lend you more than the townhouse is worth. You can contest the appraisal if you think it is low.
You will receive a closing disclosure. This document should itemize how closing costs have been divided between you and the seller. Although you should have received this document a few days in advance, double check the information. Carefully review the terms of your mortgage. Again, there shouldn’t be any surprises. Stop the closing if the mortgage details are not what the lender has previously told you. At the end of the process, you should get the keys to your new home!
