Buying a home is one of the biggest decisions of your life and can often be stressful and overwhelming. The home buying process is complex and when you first make the decision that you’re ready to buy, you might not even know where to begin. So here are a few tips to help you get started and feel more comfortable with the process.
FIGURE OUT YOUR BUDGET
Before you even start looking at houses it’s a good idea to figure out how much you want to – and can – spend on a home. Typically, lenders want your mortgage payment less than or around one third of your monthly income. You might also want to include things like taxes, repairs, renovations, homeowners associations dues, when coming up with a budget.
CHECK YOUR CREDIT
Getting a copy of your current credit report as soon as possible is a great idea so you can look at and correct anything that might affect your ability to get a loan. Things that could negatively impact your loan approval are:
- Too many open credit card accounts
- Accounts you may not know are still open
- Too much debt
- Accounts that are in collections or that are in default
- Leins on your assets
- Alleged non-payments and inaccuracies
You’ll want to have time to prepare your credit before a lender previews it so that any discrepancies or problems can be cleared up – which is why it’s best to get your credit in line as soon as possible.
FIND A REAL ESTATE AGENT
You might think that you don’t need a real estate agent yet if you’re just getting started but I can give you a lot of the information you’ll need to be aware of before you even start looking for a home.
When I meet with a potential client for the first time, I’ll talk to them about our local market, the different areas, schools, as well as what you are looking for in a home. I’ll also give you information about mortgages and financing options, tax issues, homeowner responsibilities, and how to get set up with a great lender.
GET YOUR DOCUMENTS TOGETHER
There’s a lot of paperwork a lender will need from you in order to file your loan application. Your lender will provide you with a complete list of what documents you’ll need but in general it will include:
- Income tax returns and W2s for the past 2 years
- A recent and accurate credit report
- Pay stubs from your employer
- Bank statements for the last 2 years
Getting pre-approved for a loan makes shopping for a home much easier and less stressful. It is also beneficial when it comes time to submit an offer because it shows the seller that you’re a serious buyer and have the funds to back your offer. Since multiple offers are not uncommon in our area, being pre-approved for a loan can make the difference between getting the house and losing it to another buyer.
Remember, being pre-qualified is not the same as pre-approved. Pre-qualified means you’re qualified for a loan of that amount, not that you’re approved for that loan so you don’t have an advantage like you would if you had been pre-approved. I always recommend you being pre-approved over pre-qualified.
AVOID PRE-MORTGAGE PITFALLS
When you’re in the middle of trying to buy a house there are certain things you don’t want to do in order to ensure you’re able to get a loan. Things to avoid include:
- Changing jobs
- Switching banks
- Moving money around
- Making major purchases like a car, or taking on a large student loan – these make you “less-desirable” to a lender because you’re carrying a lot of debt.
MAKE A “MUST-HAVE” LIST
Make a list of what you’re looking for in a house. Actually, make two lists. One for your “must-haves” – the things you absolutely cannot live without – and one for the things you’d love to have but could maybe live without. Knowing which items on your lists are deal breakers and which ones you could compromise on can help me narrow down which houses I think would work for you.
FIGURE OUT WHAT TYPE OF HOUSE YOU WANT
Do you think you want a single-family home or a condo? Are you looking for something that is move in ready or are you willing to do some renovations? Or are you in the market for a fixer-up? Or are you open to anything? Knowing what you’re open to can make things easier.
BE OPEN MINDED
Buying a home is a big decision and it’s helpful to go into the process with an open mind. I see many clients who can’t get past paint color or dirty carpets but that can be changed! I’m here to help you see beyond what is in the house to what the house could be for you!