Most start the home buying process by searching for the home of their dreams. The time for this will come, but there are important steps to take before getting to this point. Today’s real estate market is highly competitive and preparation is key or you might miss out on “the one.” Follow these tips to make for a smooth home buying process.
GET YOUR FINANCIAL HOUSE IN ORDER
Assessing your situation early on pays dividends. When applying for a home loan, lenders review your current debt, payment history, assets and income in order to determine credit worthiness. If you have less than a perfect past, don’t stress. Time heals all wounds, even those on your credit report. Keep current on payments and credit scores will increase as time elapses. Have too much debt? A qualified home lender can advise as to what pay first. Not all debt is created equal, so paying down the right obligations will further help improve your credit score.
SET ASIDE FUNDS TO BUY A HOME
An FHA loan, which is government backed, requires 3.5 percent of the purchase price as a down payment. In addition, there are buyer paid expenses like bank, title company and government fees. Lastly, a home inspection will run between $300-500. There are programs available that provide assistance to qualified buyers, but having your own money for some of the costs will be necessary.
FIND A REAL ESTATE PROFESSIONAL
A good Realtor, one that’s a member of the National Association of Realtors, will help you in all aspects of the home buying process. From providing references to closing, experienced Realtors have been around the block (literally), so lean on them to answer your questions and put their knowledge to work for you.
SHOP FOR THE BEST LENDER FOR YOU
Your Realtor should also be able to provide names of individuals and companies who have done a good job for their clients. In addition, ask friends and family members for recommendations. There are countless options and not all are created equal. Interest rates, loan costs and time required to close are just some of the things to consider when comparing choices. Don’t assume the bank who holds your checking account is the best alternative. Do your homework and you might save money, time and headaches later.
Sellers want to know you can close the deal and a letter from the bank that says you qualify is essential. The lender you select will review the information and documents you provide. If you meet their lending criteria, the loan officer will provide a pre-approval letter. This is the key to start the search.
IDENTIFY YOUR BUDGET.
Whomever you choose to provide your loan will provide an initial payment estimate. The total monthly expense will include principal, interest, taxes and insurance (referred to as PITI). From here, you can determine how much you are comfortable spending.
HONE YOUR WISH LIST
Whether you are spending $100,000 or a $1,000,000, there will be compromises. Decide what items are a must and which ones fit into the category, “it would be nice.” Communicate openly with your real estate agent so they understand what you really want.
SEARCH, OFFER AND CLOSE!
Regardless of your situation, buying a home is possible with hard work and determination. Here is to your best year yet and to getting into the house you always wanted.