If you are like most people, buying a home is your biggest investment – and debt. Whether it’s your first home, your last one or an investment property it cab be one of the most exciting, but also most stressful, experiences you’ll ever have. Today’s real estate market is full of opportunities. By following a few basic guidelines you can maximize your chances for success.
Don’t buy if you can’t stay put – If you can't commit to remaining in one place for at least a few years, then owning is probably not for you, at least not yet. With the transaction costs of buying and selling a home, you may end up losing money if you sell any sooner - even in a rising market. In a flat or declining market it's an even worse proposition.
Get pre-approved before you start looking – If you are serious about buying a home show seller by getting your financing in place before you look at the first house. Do not confuse with a pre-qualification, which is based on a cursory review of your finances, pre-approval from a lender is based on your actual income, debt and credit history. Getting pre-approved will you save you the grief of looking at houses you can't afford and put you in a better position to make a serious offer when you do find the right house. If you are looking at distressed properties (foreclosures and short sales) virtually all banks and servicing companies will not even consider an offer that does not include a full mortgage pre-approval.
Don’t buy anything on credit – Once you’ve completed your mortgage application do not buy anything on credit or with credit cards. Cars, appliances, electronics and furniture for your new home can all wait until after you close on your new home. Slight changes to qualifying ratios could cause an underwriter to deny your loan and even an inquiry on your credit could change your credit score. I once had a customer take his 19 year old step son out car shopping. Six different dealers ran his credit which dropped his credit score below the minimum needed to qualify. It took him another year to buy a house. Today all lenders will run your credit again a few days before closing.
Evaluate all your financing options – What’s best for you, a conventional or FHA loan? Should you take a fixed or adjustable interest rate? Should you pay points to buy down your rate? What’s better a 30 or a 15 year loan term? There is no one right answer, no one size fits all. It depends on a variety of factors, such as your price range, available funds for down payment and closing costs, your credit, how long you plan to own and what you are comfortable with. The point is ask your lender to show you all options available to you and let you decide.
Do your homework before making an offer – Before making an initial offer on any property you should know the sales trend in the neighborhood. You should know what similar homes have recently sold for and what the asking prices for similar homes are. Sellers almost always have this information, you should too.
Get the home inspected – Your lender may or may not require a termite inspection. If they don’t require it get one on your own. It is also a good idea to have some type of full home inspection. Even the most beautiful homes can have hidden problems that could require or lead to costly repairs. Many inspection companies will offer a warranty one household systems for an additional fee.
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Rio Rancho Realty & Investment (505) 892-7510 ▌ 2212 Western Hills Dr. ▌ Rio Rancho, NM 87124