Buying a home is often the largest personal finance transaction a person makes in his or her life. So it's critical that you make the right preparations and do the proper research. Regardless of unique situations and special circumstances, there are ten things you must do before buying a home.
1. Study the home buying process.
This will allow you to make better decisions and act confidently. Home buying lingo is a big part of this, so be sure to read through a few home-buying glossaries before you get into the thick of things.
2. Obtain your credit report.
Get a copy of your credit report and review it for errors. You can get copies from all three credit bureaus at once by visiting www.AnnualCreditReport.com. Mortgage lenders will review your credit with a fine-toothed comb, so you should do the same ... before they review it.
3. Fix credit errors quickly.
If you find an error on your credit report, go to the company's website where the report came from (TransUnion, Equifax or Experian) to contest it. It can take time to clean up an erroneous credit report, so get started as soon as you spot the error.
4. Check your debt-to-income ratio.
Mortgage lenders like to see a borrower's debt at (or below) 20% of net monthly income. If your debt exceeds 20% of your net monthly income, try to pay it down for applying for a mortgage loan. You'll have an easier qualification process and will likely qualify for a better rate.
5. Determine your budget.
Use an online mortgage calculator to get an idea of how much you can afford to pay each month, and what that equates to in terms of a home price. This will give you a budget to work from, which will help you weed out the homes that are beyond your comfort zone.
6. Start saving your cash.
This is one of the best things you can do before starting the home buying process, for a couple of reasons. First of all, mortgage lenders like to see that you have some cash reserves on hand. Secondly, you'll need cash reserves for any unexpected fees or costs that might arise (which is common).
7. Get pre-approved for a loan.
During pre-approval, a mortgage lender will review your credit, finances, debt, etc. and conditionally qualify you for a certain amount of mortgage. Sellers will take you more seriously if you have a pre-approval letter, and the process also helps identify any problems with your credit or other qualifying factors.
8. Avoid new lines of credit.
Try to keep your financial situation as "stable" and favorable as possible. It's a good idea to pay down some debt (see item #4 above) and to save up some cash. But the worst thing you can do is take out a new loan / line of credit. At best, this could make the qualification process take longer. At worst, it could tip the debt scales into the "greater than 20%" zone, which will make it harder to get a loan.
9. Validate the asking price.
It's called an "asking price" for a good reason. No asking price is set in stone, and everything in real estate negotiable. So don't accept an asking price as being reasonable until you validate it through careful research. Compare the home / price to recent sales in the area. Your real estate agent can provide a comparative market analysis (CMA) to help you with this step.
10. Get a home inspection.
It is never -- I repeat, never -- wise to skip the home inspection. A house is a sizable investment, and the last thing you want is to find a bunch of things wrong with it after you've taken ownership. Home inspections are very affordable, and you cannot put a price on the peace of mind you'll have as a result of your inspection.
Article Source: http://EzineArticles.com/?expert=Brandon_Cornett
Wednesday, September 19, 2007
The Home Buying Process
Many a home buyer has wondered in the midst of their looking chaos- Is this how it is done because this is exasperating? Well to help buyers figure out that the information overload age need not apply to them when looking for and in buying a house, we have detailed the Buying Process for better peace of mind and less chaos. We will assume for the purposes of this article that you are buying a home, but much of the same advice might apply for any kind of property. This article is written in a state where real estate agents handle real estate transactions, so realize that in some states or counties an attorney is required. Check with you local state officials for any differences that may pertain. Information in this article is not guaranteed to be reliable regarding differences that may exist in different states.
1. Become Educated
If you don't contact a realtor first, do at least take time to get educated both about the real estate values by shopping online and about getting pre-qualified with a mortgage lender. Maximize your opportunities to find the right home by eventually sharing your property wants/needs and timeframe with a realtor.
Your realtor can:
Direct you to competent and reputable mortgage professionals to establish your comfortable home buying price range.
Help with advanced search methods or tools.
Help you to understand neighborhoods and home features and their value in today's market, as well as relevance to your buying needs.
Conduct information gathering and research on specific properties for you.
Create a venue for home buying advice and counseling.
Discuss current market conditions.
Commit to your agent of choice for the best professional service because commitment reciprocates commitment and genuine service, which is maximizing your opportunities.
2. Get Pre-Qualified
Finding the right mortgage lender or bank can be trying. Often times a good realtor will give the best recommendation. While finding a reputable lender to help you establish a comfortable shopping range is always a first recommended step, you do not have to settle on a mortgage lender or bank just yet. But the sooner you know just how much house you can buy, the less time it will take to pinpoint homes that truly meet your needs and budget!!! Also, don't forget the energy and possible long hours saved from shopping around for homes that don't meet your needs and budget. Everyone that is sensitive to an economy based on effective use of time and information has experienced getting the 'food yanked out of their mouth'- this may be no less painful if you completely go it on your own. Insist actually on a pre-approval to include some of the items in #4 below.
Your lender will:
# Check your credit.
# Determine your debt to income ratio.
# Discuss which mortgage product best fits your situation.
# Provide a Good Faith Estimate, showing you what your closing costs would be.
# Determine what purchase price you qualify for.
# Write a "Pre-Qualification" (Pre-Approval if you take extra steps) letter that strengthens your offer on a home or property.
3. Find Your Dream Home
After becoming pre-qualified or pre-approved with a lender, it is time to find a home that truly meets your needs and budget.
Use a local realtors office or internet property search solutions to access "All the Listings". You can do this by typing into the internet the name of the city (and state, if needed) followed by the words "real estate". Most local county boards will control how much data gets released onto the internet. Most realtor sites will "serve up" some version of the local Multiple Listing Service containing all the listings. There are also some bigger 3rd party conglomerates that are competing to serve up the data more centrally because of how the information gets withheld or released and based off referral power revenue (to agents) that can be generated. Occasionally, the question of reliability in which the 2nd or 3rd party data gets delivered up, will leave that property search less desirable. Typically, these entities get property data either direct or in a "feed" from the local Board of Realtors in that County. If it's a direct line, then data can be deemed "real-time". If not, usually a day or two lag time of new listings going on will be rendered at your interface point of contact search solution. Also, many entities that serve up the data do not have a very friendly search interface console. Most people search until they can find one or two solutions they like. The bigger conglomerates compete with how you as the end user will eventually be connected up with which realtor. Both realtor and conglomerate may compete with the need to withhold enough information to still be able to entice you enough to get your contact information. Often times an individual realtor's site will give out more data on listings than the big conglomerates because they already have some security of possible representation of business. Each may be earning some of your business and this is how they hope to get to be the ones to represent your real estate interests.
Get set-up on Email Updates if that area has them. Email updates are when a new listing comes onto the market matching your criteria and you get a reference to that listing freshly emailed to you with all pictures and data relative to that new listing.
Select those homes or properties that are of interest.
If possible drive-by the listings to become accustomed to the neighborhoods, styles and curb appeal of your preference homes.
Let your realtor know which ones that you would like to see or know more about and he/she will research the homes you have selected and set appointments for those you are interested in. Please note that the realtor will have showing instructions on each listing you select, which may or may not accommodate your desires of seeing it "right now". Depending on areas, sometimes a Key-Box will be attached to the home as a way for your realtor to access the home when an appointment was not able to be secured. If this is the case, there is usually still a courteously call to the Seller that is appreciated protocol, so give your realtor some ample time a day or two, if you can, to line things up. If in an area, likelihood abound that many homes of the homes selected are on Key-Box, then less time is required and in some cases immediate showings can be arranged.
Now, your realtor should be competent enough to guide you through getting an offer written and accepted, after which you may need to immediately start on getting a loan.
4. Getting a Loan
Since, the market has been hit hard by the sub-prime market, many people and even Lenders are in a quandary over what is going to surface as the "real deal" in Lending money. Can you look far enough forward and perhaps think about becoming pre-approved, which is stronger than pre-qualified, even before you go shopping? I hope so, because the below is what you are looking at and why do this after all that house hunting work, only to find out you have wasted everybody's time. Not the least to mention is the seller having had to take their house off the market with no compensation… when you may have been able to save yourself and your realtor all that running around by figuring out first, if you can really get a loan. These are some of the basics you will need in order to obtain financing.
# Proof of Income
# Employed - 2 year tax returns or W-2, 1 month pay stubs
# Commissioned -2 year tax return including 1099 or W-2 and pay stubs
# Self Employed - Federal tax return, profit and loss statement, 2 years balance sheet
# Retired - social security awards letter
# Other income
# Rental property - copy of lease
# Alimony or Child support - copy of Divorce decree
# 2 months bank statements
# Driver's license
# Social security card
# Home Owners insurance information
# Bankruptcy information
# Proof of Earnest money check
Your lender will:
Verify your information meeting the criteria for the loan
Prepare all the required documents and verifications
Upon a valid contract, submit your package with the appraisal to the underwriters (who re-verify and give approval to release funds for this transaction)
Handle last minute conditions from the underwriters
Once all conditions have been met, the loan is released from Final Underwriting and the true lender is committed to funding the loan.Your realtor or attorney can be checking in with your mortgage lender or bank as performance dates grow close. Such dates might include making sure ny appraisal condition or loan denial deadline is on schedule to be met. Thus, you, your realtor and lender should be working hand-in-hand to ensure that the loan details are being handled and remedied as needed.
Many a home buyer can breathe a sigh of relief knowing that if you follow the "yellow brick road", along the home buying process that it will land you a home… and there is no place like home!
Brian Habel is an active full time real estate agent with RE/MAX First Realty in St George Utah- the fastest growing community in the U.S. for over a 5 year period of 2000-2006. His background includes both construction and paraprofessional work as a Child & Family Counselor making for good people skills, sales skills, and housing knowledge. He specializes in cutting edge service and technologies for both finding and selling St George Utah Real Estate. Check out Brian's blog at St George Utah Real Estate Blog
Article Source: http://EzineArticles.com/?expert=Brian_Habel
1. Become Educated
If you don't contact a realtor first, do at least take time to get educated both about the real estate values by shopping online and about getting pre-qualified with a mortgage lender. Maximize your opportunities to find the right home by eventually sharing your property wants/needs and timeframe with a realtor.
Your realtor can:
Direct you to competent and reputable mortgage professionals to establish your comfortable home buying price range.
Help with advanced search methods or tools.
Help you to understand neighborhoods and home features and their value in today's market, as well as relevance to your buying needs.
Conduct information gathering and research on specific properties for you.
Create a venue for home buying advice and counseling.
Discuss current market conditions.
Commit to your agent of choice for the best professional service because commitment reciprocates commitment and genuine service, which is maximizing your opportunities.
2. Get Pre-Qualified
Finding the right mortgage lender or bank can be trying. Often times a good realtor will give the best recommendation. While finding a reputable lender to help you establish a comfortable shopping range is always a first recommended step, you do not have to settle on a mortgage lender or bank just yet. But the sooner you know just how much house you can buy, the less time it will take to pinpoint homes that truly meet your needs and budget!!! Also, don't forget the energy and possible long hours saved from shopping around for homes that don't meet your needs and budget. Everyone that is sensitive to an economy based on effective use of time and information has experienced getting the 'food yanked out of their mouth'- this may be no less painful if you completely go it on your own. Insist actually on a pre-approval to include some of the items in #4 below.
Your lender will:
# Check your credit.
# Determine your debt to income ratio.
# Discuss which mortgage product best fits your situation.
# Provide a Good Faith Estimate, showing you what your closing costs would be.
# Determine what purchase price you qualify for.
# Write a "Pre-Qualification" (Pre-Approval if you take extra steps) letter that strengthens your offer on a home or property.
3. Find Your Dream Home
After becoming pre-qualified or pre-approved with a lender, it is time to find a home that truly meets your needs and budget.
Use a local realtors office or internet property search solutions to access "All the Listings". You can do this by typing into the internet the name of the city (and state, if needed) followed by the words "real estate". Most local county boards will control how much data gets released onto the internet. Most realtor sites will "serve up" some version of the local Multiple Listing Service containing all the listings. There are also some bigger 3rd party conglomerates that are competing to serve up the data more centrally because of how the information gets withheld or released and based off referral power revenue (to agents) that can be generated. Occasionally, the question of reliability in which the 2nd or 3rd party data gets delivered up, will leave that property search less desirable. Typically, these entities get property data either direct or in a "feed" from the local Board of Realtors in that County. If it's a direct line, then data can be deemed "real-time". If not, usually a day or two lag time of new listings going on will be rendered at your interface point of contact search solution. Also, many entities that serve up the data do not have a very friendly search interface console. Most people search until they can find one or two solutions they like. The bigger conglomerates compete with how you as the end user will eventually be connected up with which realtor. Both realtor and conglomerate may compete with the need to withhold enough information to still be able to entice you enough to get your contact information. Often times an individual realtor's site will give out more data on listings than the big conglomerates because they already have some security of possible representation of business. Each may be earning some of your business and this is how they hope to get to be the ones to represent your real estate interests.
Get set-up on Email Updates if that area has them. Email updates are when a new listing comes onto the market matching your criteria and you get a reference to that listing freshly emailed to you with all pictures and data relative to that new listing.
Select those homes or properties that are of interest.
If possible drive-by the listings to become accustomed to the neighborhoods, styles and curb appeal of your preference homes.
Let your realtor know which ones that you would like to see or know more about and he/she will research the homes you have selected and set appointments for those you are interested in. Please note that the realtor will have showing instructions on each listing you select, which may or may not accommodate your desires of seeing it "right now". Depending on areas, sometimes a Key-Box will be attached to the home as a way for your realtor to access the home when an appointment was not able to be secured. If this is the case, there is usually still a courteously call to the Seller that is appreciated protocol, so give your realtor some ample time a day or two, if you can, to line things up. If in an area, likelihood abound that many homes of the homes selected are on Key-Box, then less time is required and in some cases immediate showings can be arranged.
Now, your realtor should be competent enough to guide you through getting an offer written and accepted, after which you may need to immediately start on getting a loan.
4. Getting a Loan
Since, the market has been hit hard by the sub-prime market, many people and even Lenders are in a quandary over what is going to surface as the "real deal" in Lending money. Can you look far enough forward and perhaps think about becoming pre-approved, which is stronger than pre-qualified, even before you go shopping? I hope so, because the below is what you are looking at and why do this after all that house hunting work, only to find out you have wasted everybody's time. Not the least to mention is the seller having had to take their house off the market with no compensation… when you may have been able to save yourself and your realtor all that running around by figuring out first, if you can really get a loan. These are some of the basics you will need in order to obtain financing.
# Proof of Income
# Employed - 2 year tax returns or W-2, 1 month pay stubs
# Commissioned -2 year tax return including 1099 or W-2 and pay stubs
# Self Employed - Federal tax return, profit and loss statement, 2 years balance sheet
# Retired - social security awards letter
# Other income
# Rental property - copy of lease
# Alimony or Child support - copy of Divorce decree
# 2 months bank statements
# Driver's license
# Social security card
# Home Owners insurance information
# Bankruptcy information
# Proof of Earnest money check
Your lender will:
Verify your information meeting the criteria for the loan
Prepare all the required documents and verifications
Upon a valid contract, submit your package with the appraisal to the underwriters (who re-verify and give approval to release funds for this transaction)
Handle last minute conditions from the underwriters
Once all conditions have been met, the loan is released from Final Underwriting and the true lender is committed to funding the loan.Your realtor or attorney can be checking in with your mortgage lender or bank as performance dates grow close. Such dates might include making sure ny appraisal condition or loan denial deadline is on schedule to be met. Thus, you, your realtor and lender should be working hand-in-hand to ensure that the loan details are being handled and remedied as needed.
Many a home buyer can breathe a sigh of relief knowing that if you follow the "yellow brick road", along the home buying process that it will land you a home… and there is no place like home!
Brian Habel is an active full time real estate agent with RE/MAX First Realty in St George Utah- the fastest growing community in the U.S. for over a 5 year period of 2000-2006. His background includes both construction and paraprofessional work as a Child & Family Counselor making for good people skills, sales skills, and housing knowledge. He specializes in cutting edge service and technologies for both finding and selling St George Utah Real Estate. Check out Brian's blog at St George Utah Real Estate Blog
Article Source: http://EzineArticles.com/?expert=Brian_Habel
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