By Margaret Heidenry
Maybe you're renting in an overpriced neighborhood and are sick of writing a huge rent check. Maybe you're living in a yurt and miss having normal walls. Wherever you wake up, the same thought runs through your head every
Step No. 1: Boost your credit score
What do these three numbers have to do with buying a home? Well, pretty much everything. Your credit or FICO score—which reflects how dependable you are at paying bills—directly affects the interest rate on your mortgage and the amount of your monthly payments.
Most lenders require a minimum score of 620 for a mortgage (the U.S. average is 687), so you'll want to do everything to lift your number before applying for a mortgage. The things that drag down the score include carrying an excess of debt, missing bill payments, or applying for too much credit. So can plain old mistakes.
"If you find out there are items on your credit history that you think are incorrect, immediately start working with someone to mitigate these issues and contact all three of the largest credit-reporting agencies directly," says Joshua Arcus, president of Siderow Residential Group. These agencies are Equifax, Experian, and TransUnion.
Step No. 2: Save, save, save
A home is almost certainly the biggest purchase you'll ever make, and it's a good idea to have a decent financial cushion for everything from a down payment to closing costs.
"Save money any way you can and, whatever you do, don't buy things you can’t afford," says Los Angeles Realtor® Jacqueline Gunn. And put off any big purchases or anything with a recurring payment—like that sexy new sports car—until after you buy a house.
"You need to show your expenses are low to afford more home," she says.
Step No. 3: Figure out your budget
Think carefully about your entire budget—from student loans to groceries to your monthly Netflix subscription—when considering buying a home.
"It's not only a mortgage payment you'll be responsible for; it's also homeowners insurance, repairs, and upkeep as well as real estate taxes," says Naomi Hattaway of 8th & Home Real Estate. Add up every last expense to determine what maximum monthly output you can swing without stress.
Step No. 4: Find a good lender
You need to know exactly how much purchasing power you have to determine the top home price you can afford. To figure that out, you'll need to find a mortgage broker. Take the time to interview three or four lenders. Talk to both local banks and credit unions, as well as national financial institutions.
"The interest rate shouldn't be the only criteria when it comes to choosing a mortgage provider," says Jill Frank, a Realtor at Coldwell Banker Success. "Ask about fees, other services that are included, and ongoing customer service."
Choose a lender that makes you feel comfortable, answers your questions, and takes time to educate you on the process of getting financially ready to purchase a home. This may include paying off debt, establishing a work history, and gathering documents.
Step No. 5: Get pre-approved
After you choose a lender, make sure you get pre-approved, not just pre-qualified—that's a big difference that could mean an offer being accepted or not.
"Being pre-qualified means you’ve only discussed your finances with a broker," says Gunn. "No one has actually reviewed your financials."
Pre-approval means your mortgage broker knows concretely you can afford a home based on the financials you’ve provided.
Step No. 6: Scout neighborhoods
Look at properties in great resale areas with good schools, parks, and transportation. Make sure to also drive around the areas in the evenings and weekends to get a complete picture of what the neighborhood is like. Once you've identified an area where you'd like to buy, get to know the local real estate market. Search online for homes in the area to see if the asking prices are within your price range.
Step No. 7: Work with a great Realtor
The next step is to find a licensed Realtor. Ask friends and relatives to recommend people they have worked with previously, or research agents online. Meet with a few until you find someone who really understands what you're looking for. The real estate professional you pick should understand what homes will fit with your budget, lifestyle, and priorities.
Step No. 8: Start looking at homes
If you've made it through Steps 1 through 7, congrats! Now it's time to let the fun begin by actually getting out and looking at potential homes. In addition to looking online, go to as many open houses as possible.
"When you see something you like, ask your agent to help you find comparable houses in the area to help determine if the home is priced appropriately," says Gunn.
My name is Scott Grebner and I have been helping my clients realize their own personal real estate dreams. Real estate is a relationship-based business that works best when client relationships are built on trust and confidence. My goal is having clients be completely satisfied with the professional and caring service they have received.
The role of technology is rapidly changing how the real-estate market functions in this country today. Re/Max Preferred Choice is embracing these new mediums of communication to better serve our customers. We have created our company to better place important information in your hands to help you with your housing needs. For a personal consultation please contact me at my Website.
It seems that the dream of past generations was to pay off a mortgage. The dream of today’s young families is to get one. I would love to hear from you, about your Real Estate Dreams and questions.