Pre-qualification Is Critical
Getting pre-qualified for a loan is critical in today's real estate environment. By going through the loan process prior to signing a purchase contract on a home, you can eliminate all of the obstacles to borrowing without jeopardizing an actual purchase transaction. Once your loan is approved, your real loan closing will be quick and subject only to a satisfactory appraisal and title report on the home.
Getting pre-approved will you save yourself 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. Pre-approval is quite different from pre-qualification. Pre-qualification is merely a cursory review of your finances, pre-approval is based on your actual income, debt and credit history.
Good credit will get you more home and a better interest rate.
Since you most likely will need to get a mortgage to buy a house, you must make sure your credit history is as clean as possible. A few months before you start house hunting, order a copy of your credit report. Make sure the facts are correct. Should any problems appear, handle them quickly – see our credit repair section.
Down payment? Don't worry if you don't have the usual 20 percent.
Loans may be available today not requiring a 20 percent down payment, those loans do carry slightly higher interest rates, but they can be a great tool for first time homebuyers who anticipate increasing income potential and equity appreciation. If those loans don't fit, not to worry, there are various combined first and second mortgages plus many more variables. This might be a good time to contact one of our loan professionals.
Have kids? Buy in a district with good schools.
In most areas, this advice applies even if you don't have school-age children. Reason: When it comes time to sell, you'll learn that strong school districts are a top priority for many home buyers, thus helping to increase property values.
Real Estate Professionals.
We can help you find the best agent to represent your interests in your search. We'll set you up with what's known as an "exclusive buyer agent." A buyer's representative has the same access to homes for sale that a seller's agent does, but their responsibility is dictated by law to you.
Loan Programs and costs
With a fixed rate, you lock in a monthly payment amount that will remain constant throughout the life of the loan, even if interest rates rise. If interest rates fall, you can either continue paying your higher preset rate, or you could refinance your loan. An adjustable rate mortgage (ARM), on the other hand, has an interest rate that rises or falls with various loan indexes, such as the one-year or three-year Treasury rate or a Treasury average such as the MTA. An ARM is a great loan if you plan to sell your home within four or five years, especially if you choose on that is fixed for that period of time. During that short period of time, you will almost certainly pay less than you would with a fixed-rate mortgage
Points or no points?
The longer you plan to stay in your home, the more you may want to consider paying points. Points (one point equals one percent of the loan amount) are used to “buy” a lower interest rate.
When you actually start touring homes, bring a notebook and a digital or Polaroid camera to help you remember details. Your real estate agent should supply you with a description of each house and the lot it sits on, the property tax assessment, the asking price, and sometimes a diagram of the rooms. Your camera and notebook are there to record other details, ranging from the cost of heating to the view out the rear window.
An important note: Don't necessarily reject a house because it doesn't measure up to your current needs and goals, either in features or price. You may find added equity with a reasonable investment in an updated kitchen, or bath, etc.. Since the asking price is just a starting point for negotiation, you will be making offers and counteroffers as both parties seek an acceptable price.
When you've found the home of your dreams, move quickly.
Try to line up data on at least three houses that have sold recently in the neighborhood. Calculate the difference between the original list price and the final price of the homes sold. If the average difference is, say, 5 percent below the asking price, then you know you can make an offer 8 percent to 10 percent below, leaving yourself a little room to negotiate. If you really want the house, don't lowball. The seller may get insulted and/or give up in disgust.