As everyone knows, a house is not an impulse purchase; you can’t just waltz in and declare “I’ll take it!” Preparation is important. Here is a list of things you can do to prepare.
There’s no reason to go it alone—having an agent helping you can make the whole process much easier.
Referrals are often a good place to start; check with family and friends, or find out the go-to gal or guy in your preferred neighborhood.
You must be comfortable with your Realtor! He/she can guide you thru the whole process. He/she will calm you and direct you.
Do not pass “Go,” do not start browsing homes until you have checked your credit score. This is the number that mortgage lenders will look at to determine whether you are “creditworthy,” and thus dictates the rates you will get. The higher your credit score, the lower your interest rate—and that’s what you’re going for. Get a free copy of yours at AnnualCreditReport.com to see where you stand.
Any surprises on that report? Credit errors are more common than you might think, so contact the credit bureau to correct any erroneous information. Got credit that’s less than stellar? Check out these (totally legit!) tricks to boost your score fast and nab great rates.
Fix up whatever you can–
Next, make sure you are clear on how much home you can afford. You can get a close idea from a calculator —Check out our calculator that lets you determine your monthly mortgage payment, adjusting for variables such as the size of your down payment, your mortgage type, and current interest rates. BUT the best way is to talk to a lender.
A prospective home buyer should make one of their earliest stops with a mortgage originator to see if they can qualify for a mortgage and confirm how much of a mortgage they can afford. I like to work with lenders I know. I can recommend lenders to you.
There are lots of programs out there. Some will help with down payment. Some require no down payment. the lender is the expert.
Once you’ve found the mortgage that’s right for you, you’ll want to show sellers that you have what it takes to buy their home. A pre-approval is required for a seller to take your offer seriously. That’s because it spells out exactly how much a lender has agreed to loan you, thus assuring the seller that you’re both willing and able.
To get the best rates, you’ll need to make at least a 20% down payment on a home. But this is not required. VA loans require $0.00 down. FHA loans require a minimum of 3.5% down. Conventional loans require a minimum of 5% down. A lender can tell you if you qualify for a VA, FHA or conventional loan.
You will also need money for closing costs (around 3% of the home price). It is possible to negotiate with the seller to have the seller help with this…but if the market is hot this may not be possible.
Once you’re ramping up to buy a home, it’s wise to not make any—we repeat, any—major changes in your life or, most important, your finances. Do not quit your job….talk to your lender before you make a move!!
“Do not switch jobs. Do not buy a new car. Do not even buy furniture or apply for a new credit card, which could affect your credit,” “Just a credit pull alone from a car dealership or a furniture store is enough to affect your credit score and could cause you to lose your dream home.”
Of course, this list may be a very long one, but you need to be realistic about what elements are truly “wishes” and which ones are nonnegotiable—such as number of bedrooms, a fenced yard for a pet, a specific school district, walking distance to the bus stop, etc. Sometimes it’s helpful to divide your list into three categories: Those nonnegotiable elements, followed by items that would be nice to have (e.g., a bonus room or home office) and your dream features (e.g., in-ground swimming pool). Often location is a key factor.
If I do say so myself, my website is a great place to start to figure out what properties are available in your area in your price range. Search by price, number of bedrooms, location, and other variables to start narrowing down your options. I can help you by creating a custom search.
You’ve undoubtedly heard the adage “location, location, location.” What that essentially means is that you’re not just buying the property you’re looking at; you’re also buying into the whole neighborhood. That’s why you have to be certain that it has the vibe you want. Savvy home buyers know that the best way to find out more about the neighborhood is to meet the neighbors and then visit at various times of the day and night to see what it’s really like.
If you do all this you will go into the process with your eyes open and prepared.