Ten Important Tasks to Complete Before Buying a Home (Unnamed Real Estate Blog)

Ten Important Tasks to Complete Before Buying a Home

Buying a home is an important decision. Not only are you deciding on where you are going to live for many years to come, but you are also making a huge financial decision that will greatly affect your finances. This is not a decision to enter into lightly, but by following a few simple tips, you’ll be much better off, and will be glad that you did many years from now.

• Find out what your credit looks like
The world of finance is intimately coupled to the world of credit reporting. The days of getting loan approval based on your friendship with the local banker are over. In order to get the best financing available you are going to need to have your credit in order. The first step in this process is to get a copy of your credit report. The credit reporting agencies are required to give you one free copy of your credit report per year, and you need to take advantage of this fact. Go to www.transunion.com, www.equifax.com, and www.experian.com and get a copy from each.

• Take steps to improve your credit score
Now that you’ve gotten your credit, you have a good idea of where to start to improve your score. There are some obvious ways to improve your score, like paying off any charged off accounts or accounts that have gone to collection status. But, there are also ways to improve your score even if you haven’t had any mishaps show on your report. If you have any credit card debt you can do one simple trick to very quickly and dramatically increase your score. A big part of your credit score is determined by the relationship between your credit balances and your available credit. In other words, the closer you are to maxed out, the lower your score will be. If you call all of your credit providers and ask for an increase on your credit limits, you will be increasing the spread between these numbers and your score will show marked improvement.

• Get pre-approved for a mortgage
Going into a home purchase without your financing in order is a big warning sign to home owners. There is nothing more frustrating to a homeowner than going through a two month process of trying to sell their home only to find out that the buyers are not able to get approved. It is imperative that you get your financing in place prior to even looking for a house so this is not an issue.

• Get your down payment ready to be made
Unless you are simply using money that you have saved in your bank account, you need to make sure you have your money freed up and ready to be used for your down payment prior to starting the loan process. This is doubly important if you are going to be borrowing money from family for the down payment, as most lenders are going to require you to “season” the funds that you use. Seasoning funds means that you’ve had them available to be documented for at least 60 days. It’s important that you have any funds transferred into your bank account before you even start the home search.

• Find the right area
Now that you have your financing in order, it is time to start the process of finding the right home. Before you even start looking at houses, it is important to do your research and decide on a couple particular areas that you want to live in. This is very important, in that it is very easy to fall in love with a house, even the wrong one. If you spend the time to make an informed decision about where it is you’d actually like to live in town and then limit yourself to looking at houses in those areas, you’ll ensure that you years from now you aren’t living in a home that you love in an area you hate.

• Research values in your chosen areas
Now that you’ve decided on the areas you want to live in, you need to do some research on a good median price for the areas. This is a crucial step in your decision process, as you don’t want to fall in love with a house that is overpriced. If you go to a home valuation site, like www.zillow.com you can search through the area and start to get a good idea as to what homes are selling for in the area. If you’ve done your research before the home search, you’ll be able to avoid even looking at houses that are priced too high, and thus keep yourself from falling in love with a house that is anything but a bargain.

• Get a home inspection
Once you have narrowed your search down to a house that you are interested in, you need to make sure that this is a house worth buying. The problem with buying homes, especially when you are not in the business of home repair or construction is that it is very hard for you to be able to see any serious problems with the home that may be lurking just below the surface. Getting a home inspection is one of the most important of these tips. The inspection will let you know every little thing that is in need of repair, and even better, most home inspections will carry a warrantee with them, so should anything happen to fail in the home, you will be covered.

• Get an appraisal
Most buyers overlook this step until after the contract has already been signed. Unfortunately, however, this is one of the more important things that need to get done prior to making an offer on a home. Even with your previous research on the area, you will not be able to know with certainty what the individual house is actually worth. If you’ve already done the home inspection and know that you want the house, it’s time to make an offer, but as opposed to using the asking price as a starting point for your offers, you need to know what the house is actually worth, not just what the listing agent is trying to sell it for.

• Make sure to get your closing costs paid for by the seller
Financing is not cheap. There are going to be a large amount of costs incurred by the financing of your mortgage, but these costs are mostly unavoidable. It is true that you must have these costs in order to get approved for a mortgage, but even more important is the idea that these costs are just as important for a homeowner to be able to sell you the house. Remember this when you make your offer, and make sure that you stipulate that the seller needs to pay for yours.

• Remember that this is a buyers market
Even with the extension of the first time home buyer tax credit and creative government financing, there are still considerably less qualified borrowers than there have been in the last five years. It is important that you remember this when you begin the negotiation process. You are a rare commodity as a buyer, and the seller knows this. If you are not getting the deal on the home that you want, do not be afraid to walk away from the deal. Not only are there numerous other homes that will work for you, but the chances are good that you will be able to demand a lower price on the home, as most sellers will realize that you have the upper hand in the transaction.

Buying a home is an emotional and trying activity. It can be stressful and can be a very difficult process, but if you do your homework and follow these tips, you will be putting yourself in a position to eliminate a very large amount of the stress involved in the process.