What you should do to prepare to buy a home
So you've found your dream home! Now all that is left to do is go to the bank, borrow the money, set up the mortgage and move in-Right? Not so quickly first-time homebuyers often do not realize that the key to a successful and hopefully low-stress home buying experience is to do your homework first. Real estate experts recommend that if you take some important steps before even looking for a house once you find the house or condo of your dreams the entire home buying experience will go a lot smoother and be much less costly. So if you are in the home buying market here is what you should do to prepare to buy a home.
1. Pull your credit report. This is extremely important that you do this well in advance of buying a home. You need to see what your credit is before you even go and apply for a loan. If your credit is good you will be offered the best possible interest rate but sadly many potential homebuyers find out while in the loan process they have numerous problems on their credit report and a poor credit rating. This will leave you with the choice of accepting a loan with a high interest rate or abandoning the home buying process altogether. By knowing what your credit rating is before preceding to buy a home you can be assured of a good interest rate on your mortgage or you can take the time to fix mistakes and raise your credit score if you need to.
|
|
2. Pay down debt. Along with your credit score your lender will be looking to see how much debt you are carrying. It is simply not enough in today's financial environment to have a good credit rating. Carrying to much debt to for your income will have lenders seeing you as a high risk for foreclosure. Make a plan to see what you can pay off or significantly pay down before beginning the home buying process and you may find that it pays off in more ways than one.
3. Save for a down payment. Most conventional loans with the best interest rates require a 20% down payment. You will find that you are offered the best loan if you can provide this much of a down payment. Having a sizeable down payment also gives you better bargaining power when you do find that home of your dreams.
4. Get pre-qualified for a loan. Many idealistic homebuyers are jolted back to reality after finding the home they love with all their hearts that there is no way they can qualify for that big of a mortgage. To save yourself both hassle and heartache get pre-qualified for your loan before you begin looking at house. This way you can have a realistic picture of what you can really afford. Just keep in mind that your lender will give you a wide price range to look in so be sure and figure out if your can afford the payments on the house you have chosen if you decide to spend in the upper limits of your pre qualification. Being pre-qualified can also help if you have to negotiate with the seller of the home since many buyers are not pre-qualified having this in hand will make you much more attractive to a seller who wants to sell his home fast.
5. Check out neighborhoods, schools, crime rates etc. If you are looking to move to an entirely different city or even just a different neighborhood be sure and check out the surroundings before you spend too much time looking for a house. If you have children check out the schools, proximity to parks and other recreational areas. Drive through the neighborhood at different times see if there are families, older couples, commuting couples who are gone all day and then see if this is the type of neighborhood you want to live in. You can also look up crime statistics to see how your potential neighborhoods rate. Doing a little bit of homework before you fall in love with a house will help you make the decisions to make this next move definitely the right one. Once you have all your needed information there is only one thing left to do-go house shopping!
