So you have decided you are ready to buy your first home.... Now what? Buying a home can be a stressful, yet rewarding experience. There is nothing like the pride of home ownership. Here I have made a list of a few steps to make your home buying process a bit easier.
#1 Know your credit situation.
You need to take a look at your credit report and check for any inaccuracies. If there are any, your first priority is to get that taken care of. The better your credit score, the better interest rate you will get and it can make a huge difference in your monthly payment. A good tool to use is Credit Karma, it is free and updates weekly so that you are able to be informed at all times. Credit scores can range from 300-850, the higher, the better. Typically, you will get the better interest rate if your score is 740 and above. Also, you will want to keep an eye on all of your open accounts. If you have credit cards, you will want the utilization rate to be below 30%.
#2 Money, Money, Money
If you haven't started saving money yet, now will be the time to start. You will need cash for your down payment and closing costs. Your down payment amount will depend on the type of loan you receive. There are many great loan programs available with the most common being FHA or conventional. For the most part, you will be looking at 3.5-5% of the purchase price as your down payment.
3# Don't open new lines of credit
Did you know that anytime there is a inquiry on your credit your credit scores take a hit? It can be tempting to see if you qualify so that you can get a 20% discount at a store but it could jeopardize the bigger goal.
#4 Interview potential real estate agents
In most cases, this is the biggest purchase you have ever made, so you will want an agent that is knowledgeable, good, has integrity, and has your best interest in mind. You owe it to yourself to shop around and be sure you have the right agent for the job.
#5 Find a mortgage lender
Before you even start browsing homes online you will need to pick a mortgage lender. Don't know where to start? If you have been with your bank for a good while you can ask them or ask the realtor you have chosen. Your realtor will work with the lender through the entire transaction and usually have lenders that they have worked with in the past and would recommend.
#6 Get pre approved
Once you know how much home you can afford, perform your home search based on your preapproval amount or less.
But how do you get preapproved? By preparing a few documents, which you can do several months in advance of the actual purchase. Here’s what you need to buy a house.
Tax returns for the past two years
W-2 forms for the past two years
Paycheck stubs from the past few months
Proof of mortgage or rent payments for the past year
A list of all your debts, including credit cards, student loans, auto loans, and alimony
A list of all your assets, including bank statements, auto titles, real estate, and any investment accounts
If you have any questions or are ready to get the process started, give me a call!
Realty Executives International - Where The Experts Are! Our Executives are experts in selling Tuscaloosa, Northport, the University of Alabama and West Alabama. Whether you need a cottage or a castle, call on us! With over 25 years of experience in the local market, our business is built on our reputation: We sell homes faster, and for a higher Percent of listed price than the average for our area. Find out why!
"Earlier this year my husband lost his job and a little over a month after that I was out of work on maternity leave. Neither of us were getting any pay. Prior to this our house was already on the market. After a few months of trying to sell our home and running out of savings. We decided we had to do something or we would have to foreclose on our home. After many tears, we decided that a short sale was the best option for our family. The realtor we were with referred us to Ms. Debra Smith because she could better help us with a short sale. She was AWESOME, so comforting and understanding of our situation. She assured me that this would not haunt us forever. She stayed on top of this sale. I felt almost as if I was her only priority. I could not have asked for her to be anymore reassuring that she was going to make this sale happen for us. I received constant updates of what was going on and where we were with the sale. The day of the closing when we were done signing papers, I had a small break down and she again assured my husband and I that we would recover from this and it would only "ding" us for a little while. Anyone I know looking to buy/sell a home, I will refer to her and make sure they know what she did for us and assure them they will NOT be disappointed.