What You Need To Do Before You Start Looking to Buy a Home!
Now that you decided you like to buy a home you should start with checking your credit score. Do not rush out to look and think you can buy a house at a price and payment you are comfortable with. Best way to do that is to talk to a lender or mortgage broker. You can talk to your bank that you are banking with or your credit union. If you contact a Realtor® to represent you, and you should, he/she may have lender contacts for you that are best suited for your situation.
Too many people get excited and rush out and start looking. They do not know what a lender or bank will pre-approve them for. It is easy to fall in love with a more expensive home and disappointing if you have to step back a little. Trust me it has happened to buyers and that is not a good feeling,
Buying your first home can be challenging because you don’t really know where to start. A local lender is the best way so you know what they pre-approve you for or better how much house you can get based on what they will lend you. Many buyers search the internet for a loan and in general it is best to go local for many reasons and closing on time without delays is the biggest. Many times I have seen and heard they got a nice deal but in the end it cost them more than had the buyer gone local.
Did you save enough money for a down payment and closing cost? Closing cost is the cost to obtain a loan. Sometimes the seller can assist you and pay for some closing cost. I call it what it is, you finance your closing cost into the loan. Over 30 years that is minimal in your monthly payment.
If you check your own credit that may vary from what the lender sees when they do it. I recommend you talk to a lender because you have to get a pre-approval letter if you like to make an offer on a home that you like to buy.
If you find out that your credit score is not high enough to get a loan at the present time there are things you can do to increase your credit score.
One way is a Secure Credit Card where you pledge your own savings for it. I would not pay off anything until you talk to a lender because they know best what raises your credit scores. You should not close a credit card unless they tell you to do that.
You should avoid establishing new credit unless the lender tells you what to and how to do it. Don’t shop for a car or furniture until after you purchased and closed on this home.
If you know your credit score is low you want to start with a lender and take their advice what to pay off first so your credit score increases and you can get eventually pre-approved to purchase a home. Because everything has changed when it comes to a mortgage that is the best way to start in my opinion. They gladly help you with this and so does your Realtor®. I like to point out that not all agents are Realtors® and not all Realtors® are created equal. There is a difference.
Realtors should be able to advise and guide you how to avoid Mortgage Insurance and how to pay off your mortgage before 30 years. Mortgage Insurance only protects the lender and you are required to pay it if you do not have 20% down payment. There is a lot to be learned when buying a home and your Realtor® can be a wealth of information.
Rosemarie Averhoff, CRS®, Broker Associate, REALTOR®
RE/MAX Metro Associates 803-629-8844