If you've been thinking, dreaming or have started the process of buying a home you've probably noticed that there are a lot of players involved. For many people, purchasing a home is the single largest investment they will ever make. Seemingly inconsequential mistakes can end up costing a home buyer tens of thousands of dollars and even result in the loss of a sale. That's why it's crucial to know who truly has the best interest of you - the home buyer - in mind.
Here are some common topics that are often overlooked. Paying close attention to these can end up saving you a lot of hassle (and money!) throughout the purchasing process.
1. Getting pre-qualified BEFORE looking for a home
What you think you can afford and what the bank is willing to lend you may not match up, especially if you have poor credit or unstable income, so make sure to get pre-approved for a loan before placing an offer on a home. *Be aware that even if you have been pre-approved for a mortgage, your loan can fall through at the last minute if you do something to alter your credit score, like finance a car purchase. If you cause the deal to fall through, you may have to forfeit the several thousand dollars that you put up when you went under contract.
2. Find out how much house you can afford!
If you don't already have a budget, make a list of all your monthly expenses (excluding rent), including vehicle costs, student loan payments, credit card payments, groceries, health insurance, retirement savings and so on. Don't forget major expenses that only occur once a year, like any insurance premiums you pay annually or annual vacations. Subtract this total from your take-home pay and you'll know how much you can spend on your new home each month. When calculating this figure use a mortgage calculator to research current interest rates. This will give you an estimate of what your total mortgage payments will be. *Don't forget to factor into additional costs such as homeowner association fees, property taxes, etc. If you are at all unsure about how much you can afford contact us and we can connect you with the right professionals to answer all of your financial questions!
3. Working on your credit before starting the pre-approval process
This is a big one. Not only can your credit cause you to be denied mortgage approval, but a good credit score can get you the best interest rates and save you thousands (or more!) over the lifetime of your home loan. You have nothing to lose and everything to gain by talking to professionals about what you need to do to increase your credit score and how long that process would most likely take. You may be surprised at how quickly you'd be able to improve your credit and therefore your overall home buying experience! Read some stories about others who have done just that!
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4. Getting professional help