What should I know before buying a home
Friday, November 22, 2013 -
Joe Metzler, MLO. NMLS #274132 - Mortgages Unlimited, Inc -
What should I know before buying a home in MN or WI?
Here are some tips that could save you a lot of time, money and trouble.
- Plan ahead. Establish good credit and save as much as you can for the down payment and closing costs.
- Get pre-approved before you start looking. Not only do real estate agents prefer working with pre-qualified buyers; you will have more negotiating power and an edge over homebuyers who are not pre-approved.
- Get a REALISTIC housing budget and stick to it. Talk to your Loan Officer about debt-to-income ratios
- Know what you really want in a home. How long will you live there? Is your family growing? What are the schools like? How long is your commute to work? Consider every angle before diving in.
- Make a reasonable offer. To determine a fair value on the home, ask your real estate agent for a comparative market analysis listing all the sales prices of other houses in the neighborhood.You don't want to over pay, and you don't want to waste everyone's time with unrealistic low ball offers.
- Choose your Lender carefully. Roughly 80% of Loan Officers are simply unlicensed application clerks. Only work with a licensed Loan Officer. TIP: An Loan Officer NMLS # is NOT a license. Ask them if they are licensed or simply registered. Verify a Loan Officer at www.NMLSConsumerAccess.org. At the bottown of the page, if one or more state licenses are listed. They have a licensed. If it says Federal Mortgage Originator, they are NOT licensed.
- Choose your real estate agent carefully: A real estate license legally allows someone to practice real estate - it doesn't mean they are good. Check experience, references, etc. Also, under NO circumstances should you ever use the homes listing agent as your buying agent.
- Consult with your lender before paying off debts. You may qualify even with your existing debt, especially if it frees up more cash for a down payment.
- Save for down payment: While some first time home buyer assistance programs are available, you are much better off, and have many more options if you have your own money for down payment. Try to have at least 3.5% for an FHA loan, but 5% for a conventional loan is much better.
- Keep your day job. If there is a career move in your future, make the move after your loan is approved. Lenders tend to favor a stable employment history.
- Do not shift money around. A lender needs to verify all sources of funds. By leaving everything where it is, the process is a lot easier on everyone involved.
- Do not add to your debt. If you increase your debt by financing a new car, boat, furniture or other large purchase, it could prevent you from qualifying.
- Timing is everything. If you already own a home, you may need to sell your current home to qualify for a new one. If you are renting, simply time the move to the end of the lease.
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