HOME BUYING TIPS
Top 7 tips when buying a home:
It sounds simple but the more you have saved up the less you need to borrow. Having money saved up will provide you with leverage when it comes to interest rates, closing costs, and the down payment. The down payment for a house can be as low as 3% of the purchase price it all depends on what you need and how it figures into your monthly budget.
You want to start considering what a comfortable payment for you is to pay per month. This is one of the first questions that I ask when meeting someone. When you are renting you will pay between $1000 to $2400 depending on what you rent but a mortgage can cost between $2000 to $3200 depending on your needs. This can sometimes be a sticker shock. If you take sometime to consider what works within your budget you will feel more confident with the information that you receive and how that applies to you.
Manage your credit wisely. It may seem small but good credit can mean the difference between being qualified with a low rate versus not qualifying at all. Websites like AnnualCreditReport.com offer a free credit report every 12 months so you can keep track of your score. There are three credit reporting bureaus that report a score for your credit; TransUnion, Equifax, and Experian. When applying for a mortgage the middle score between the three bureaus is used, and between two borrowers the lowest of the two will be the qualifying credit score. The better your score the more options you will have available.
4. Research Loan programs
Do some research when it comes to loan programs before walking in. You want to have at least a base of knowledge to work from when meeting your loan officer, this will help from feeling overwhelmed when discussing options for the first time. There are a lot of different versions of the 4 most basic loan products:
Conventional Financing - Loans that conform to government stated regulations set by entities known as Fannie Mae and Freddie Mac will allow a down payment as low as 3%.
FHA Financing - Is a government insured loan that will allow a down payment as low as 3.5%.
VA Financing - Is a government insured loan that may not require any down payment is specifically for Veterans who have served in the United States military, as a reservist, or a is currently in active duty.
USDA Financing - Is an agricultural loan insured by the government specifically for the use of purchasing designated agricultural properties.
Each loan has it's benefits and drawbacks depending on your personal scenario, the more questions you have ready to ask the better you will feel about the meeting with a loan officer.
5. Pre-approval letter
It's time to meet with a Mortgage Advisor who can walk you through your options by reviewing your financial documents, discussing your goals, and reviewing how your options can fit into your budget. A pre-approval letter is proof that a Mortgage Advisor has reviewed all of your financial documents and has reviewed your options with you. A pre-qualification letter lacks the review of details that a Pre-approval letter does.
6. Hire a Real Estate Agent
A good Real Estate Agent is someone that you feel comfortable with to represent your needs when it comes to negotiations and has a strong understanding of the area that you are looking to purchase in. Be sure to discuss your goals and objectives when it comes to buying a home. Communicating your goals to your agent will help them best represent you in the transaction.
7. Understand the area
Real Estate is about location, location, location! You can change a house and improve it to match your style but it is the area in the end that you can't change. Your Real Estate Agent will help you understand growing potential in areas, school districts, and new commerce that is moving into a particular area so you can make a successful decision when buying a home.
“A goal without a plan is just a wish.”
― Antoine de Saint-Exupéry