Preparing to buy

Not sure if you are ready to buy?  Well, I am sure that you’ve heard that “knowledge is power” and you will find this to be especially true when purchasing a new home! It is important to take the time to educate yourself about what to expect before you make the commitment. Below are a few suggestions that will help position you for a smooth transaction and a pleasant home buying experience once you have made that decision.

1. Know your credit score. Your credit score is one of the main factors used in determining what options will be available to you in terms of loan programs, products, and interest rates. A good score positions you for a wider variety of loan options and can lead to a lower interest rate which in turn can save you thousands of dollars over the life of your loan. It is important to note that lenders will usually reserve the lowest interest rates for customers with higher credit scores. See tips on how to improve your credit.
2. Save as much money as possible. Keep in mind that while your down payment amount will range from zero to twenty percent, it is not the only expense associated with buying a new home. You can anticipate that other expenses related to your purchase – also known as closing costs and escrows- will add an additional 3% to 4% of the sales price to your overall costs. The more money that you have on hand, the smoother and more pleasant the overall experience will be!
3. Pay down debt. Your current debt plays a vital role in how much a lender is willing to lend you. Even though your credit score and income may both be good, if your debt is too high it will limit how much home you can buy. Along with your credit history, a lender will utilize two ratios known as the housing expense ratio and the debt-to-income ratio to determine how much they are willing to lend you. The higher your income and the lower your monthly debt, the more home you can buy!
4. Get pre-approved BEFORE you go shopping. Getting pre-approved before you start shopping for your new home is the best way to find out how much you can afford. Not only that, but a Pre-Approval Letter informs the seller that you are able to get the financing needed to purchase the home being sold. Thus, you will be confident that once you find the perfect home, you will be able to move forward with the purchase! See how much home you can qualify for.
5. Do not make changes to your financial situation. Your pre-approval is based on the information that you provide at the time of your application; therefore, it is imperative that you not make any major changes to your current financial situation. Making large purchases, getting a new job, or going on leave, can result in your loan being denied – even after you’ve been approved. Before you change anything, it is best to check with your loan officer for guidance.
6. Work with a skilled Realtor. Working with a Realtor who knows the local market can go a long way to ensuring that you get the best value for your dollar and the home of your dreams. He /she will help you navigate the home buying process. Realtors can be invaluable, so make sure you find one who will not only work for you but one who is also willing to work with you!