Preparing to Buy a Home

As a renter, you’re essentially making mortgage payments for a property you’ll never own. Why not put that money towards something that at the end of the day is yours? Be prepared to make the switch from being a renter to becoming a homeowner and enjoy the sense of pride and tax benefits that come along with it!

Your Credit Score

Your credit score is a huge factor in determining what kind of loan you’ll be qualified for. If you know you have mistakes on your credit history, now is the time to get them fixed. Former bankruptcy, foreclosure, and outstanding collections should all be addressed before attempting to buy a home. Invest in a service to help you rid your report of these counts against you. This investment will allow you to present a home mortgage lender with the cleanest report possible and qualify for a better loan which will allow you to buy save you money in the long run.

The Down Payment

It used to be that 20% of the total cost of the home was needed as a down payment in order to purchase. Today, it is possible to buy a house with a smaller cash down payment than the standard 20% as some mortgage lenders are willing to underwrite a loan for buyers with less. Buyers with a less than 20% down payment may also be required to buy Private Mortgage Insurance (or PMI). The purpose of this is to protect the lender in the event you can’t pay. Those with especially bad credit however, should not expect to be able to get away with a lesser down payment and may actually have to pay more than 20% down to have such blemishes overlooked by the lender.

Why You Need a Real Estate Agent

There are a lot of steps and paperwork involved in buying a house, so it helps to have an expert on your side to guide you through it all. Not only that, but a real estate agent will represent you in the event that the need for negotiation arises, which is always a very big possibility. Real estate agents are professionals at negotiation and can relieve a lot of the stress associated with being a home buyer, whether you’re a first-time homebuyer or not.

If you’re worried about the cost of hiring a real estate agent to help you with the process of finding and purchasing a home, you’ve got nothing to worry about. Many of us aren’t too familiar with the finer details of how a real estate agent gets paid, but as a buyer, it costs you nothing. All closing costs are paid by the seller, therefore it’s much better to have a real estate agent than not. They have full access to a database of homes for sale through a system called the MLS (which stands for Multiple Listing Service) and are able to explain documents and meet the deadlines that are part of the home buying process.

Putting Together a List

Do yourself and your real estate agent a favor by putting together a list of needs versus wants. Knowing the requirements of your living space versus the things you wish to have, can save a lot of time in the long run because it puts on paper a clear definition of the type of property to look for.

For example, you may need a house with an office but also hope to have a house with central air conditioning, though not completely necessary. Your real estate agent, based upon this list of criteria, will only look for homes with offices and try to show you ones that also have a central air conditioning system. By having this list ahead of time, you won’t waste time and effort looking at properties that don’t suit you or your family.

When creating your list, you should also include criteria the neighborhood should meet as well. Think about your current needs and needs that may arise as your family grows or shrinks. Will you soon be an empty nester or are you the proud parent of a kindergartener? Take into consideration what vicinity you need to be in, in relation to school, work or public transportation.

Good luck in your home search, feel free to contact me for any further questions you may have.