First Time Buyers; Be Prepared!
I have worked with several first time buyers and some second time home buyers who were confused about the process of buying a home and needed help navigating through the home buying process. I have compiled a list of actions to help buyers prepare for a smooth journey leading to the purchase of their dream home.
Check your credit worthiness.
Request a copy of your credit report, examine it for any errors and fix any problems that you discover. The free credit report does not tell you what your credit score is. You can get a free copy of your credit score; the web site that offers your score is www.freecreditscore.com (just be sure to cancel after receiving your report). The credit score is the basis a loan officer uses to determine the rates and interest on a mortgage. Keep in mind, a lender is going to look at more than just the score, but also the history and debt-to-income ratio of a potential buyer.
Determine how much house you can afford.
Usually plan on purchasing a home priced at two and one half times your annual income. My Berkshire Hathaway Home services (BHHS) web site (http://jpoettinger.onehomefinder.com) has a How Much House Can You Afford calculator, which will give you an insight on how your income, debt and expenses affect the amount you can afford when it gives you the purchase price you can afford.
Check your balance in savings.
Having a down payment of 20% of the sales price eliminates the need for Private Mortgage Insurance (PMI), which adds additional monies to your monthly mortgage payment. The minimum amount of down payment varies from loan company to loan company, so you may need to do some research to find one to fit your needs. A good Realtor keeps a small army of various lenders in her back pocket so she can refer one that best suits the buyer's needs.
Collect pay stubs, bank account statements, W-2s, tax returns for the last two years, statements from current loans and credit lines, and names and addresses of your landlords for the past two years. Collect these together to take to a loan officer.
Visit a loan officer.
You will need to get pre-approved for a loan. Do not be surprised if the loan officer requests more documentation than what you brought. Qualifying for credit is getting tighter and tighter it seems. You can get approval letters from more than one lender, which may increase your chances of getting the best rate possible without dinging your credit score too much. With a pre-approval letter you can make a serious offer when you find your dream home.
Choose a neighborhood.
The old saying about location, location, location holds true. Choosing a home in a good school district will pay off when it is time to resell. You can do research on the internet to find the school ratings for various areas in a region.
Contact a real estate agent.
A buyer’s agent will protect your interest and work for you in finding the right home, and by negotiating the best price and terms for you during the buying process. Buying a home is usually the most important financial purchase most people make in their life. To help you achieve your dreams of buying a home and avoid pitfalls along the way, make sure you have a professional buyer’s agent working for you.
If you're looking for a home in the Miami Valley, Troy, Sidney, Piqua, Tipp City or surrounding areas, I'd love the chance to earn your trust and business. Call or email me if you have any questions or need help with your home purchase.