Ready to purchase a home? The following tips can help you work with your REALTOR® more effectively and ease the emotional stress of finding that perfect dream home:
Make a list of all the features you want in a new home-remember to consider floor plan, location, proximity to work or schools, and any other elements that are important to you. Put as many items as you can think of on your list.
Once you feel your list is complete, begin to prioritize each item on the list. Determine if the item is an absolute requirement, is something you really want but isn't essential, or would be nice but won't really affect your decision to buy. If you think of more requirements, go ahead and add them to your list..
Re-write your list, placing all your absolute requirements at the top, followed by wants, then non-essentials.
Make multiple copies of your list so you can take it with you when looking at available properties. Give a copy to your REALTOR®.
Keep in mind that some communities have Homeowners Associations, and that these associations may charge dues (monthly or annually) to homeowners. There are also leased land communities where you own your home but you "rent" your land on a monthly basis. Some communities also have ad valorem or pass on taxes which are paid either monthly or annually by homeowners and goes toward upkeep of the community. You will need to add this cost to your monthly financial plan.
Take a hard look at your finances and cash on hand. When you are ready to buy, you will need an earnest money deposit (which will apply to the total payment), and closing costs. The total amount available for a down payment will help you determine how much loan you will need if you need fianncing.
Talk to your REALTOR® about financing - he or she can help you determine the type of loan you may need, and can direct you to mortgage resources with products that meet your needs. Please keep in mind that not all mortgage compaines finance any type of home. Many mortgage companies have restrictions or guidelines as to what they will finance. All information is confidential!
If you have not already received loan approval for a new home, begin researching mortgage lenders. Consider the following:
Establish good credit, and save as much as you can for a down payment and closing costs. While there are mortgages available for $0 down, 3% down, etc., anything less than a 20% down payment will require that you pay Private Mortgage Insurance which can add substantially to your monthly payment. Any home purchased on leased land will require a 20% down payment regardless of the lender.
before you start looking
You will have more negotiating power and an edge over non-qualified buyers when you find the right home. If possible, go one step further and get full approval-this will eliminate potential problems down the road.
Set a budget
and stick to it
Keep in mind the costs of purchasing a new home, and don't overextend yourself. In addition to the down payment, you will also have closing costs, moving costs, application fees, insurance and likely some cash outlays shortly after your move.
you really want in a
How long will you live there? Is your family growing, or are your children nearing college age? Keeping these factors in mind will help you determine the best type of loan for your needs.
loan-and your lender-carefully
Compare loans, ask questions, read the fine print. It may seem that all loans and lenders are equal, but there can be significant financial differences between them.
your lender before paying
You may qualify even with your existing debt, especially if it frees up more cash for a down payment.
Clean up your
Get a copy of your credit report, and review it carefully. You may have open accounts that need to be closed, or items that can be cleaned up with a few phone calls. Making the effort may improve your credit rating which could lead to a better rate and less down payment.
to your debt
If you are considering other major purchases, such as a car or major appliances, wait until after the home purchase is complete. These items will show up on a credit report, and could disqualify you from obtaining a home loan.
A stable employment history is one of the elements of a loan approval process. If there is a career change in your future, wait until after your home purchase is completed.
Do not shift
Lenders need to verify all sources of income and funds. By leaving everything where it is, the process will go more smoothly and quickly.
Gather the documents you will need to apply for a loan, and have everything photocopied so you can provide copies to several lenders. The items you will need include your social security number, last 2 pay stubs, tax returns for the past 2 years, a record of your ongoing debts (credit cards, loans, etc.), a list of your residences for the past 7 years. These documents will be required for each borrower.
If you already own a home, you may need to sell it to qualify for a new home loan. Since selling a home can take time, think about listing your home now. If you are renting, plan your move to coincide with the end of your lease.