Buying a home is one of the largest financial purchases many of us will make in our lives. Even during this present situation there are things you can be doing to prepare yourself to buy a home.
Lenders at the moment, have tightened credit, and even if there is a rescue plan it is likely that some if not all of these lenders are going to working with much stricter guidelines. So you need to start doing several things to get ready.
America is a society that loves to spend money, but you need to use some restraint and start saving so you will have funds for a deposit and also for closing costs when you buy. Closing costs are transfer taxes, repayment of taxes the current owner has already paid, deposit of taxes that the mortgage company is going to pay on your behalf later, fees for recording the deed and a host of other fees related to your mortgage and your purchase. As one financial advisor said you need to pay yourself first and live on the rest.
On top of saving you also need to work at improving your credit score, pay all your bills on time, look at your expenses and cut back where you can so you are able to pay on time and also have funds to save. Do not over extend yourself with multiple credit cards switching funds around between cards. It is far better to use one card and only put on the card what you can pay off. As you pay your bills on time it will improve your credit score. As lenders are now using tighter credit controls, make sure you know your credit score and what is on your own credit report. Don't wait till you apply for a mortgage to discover there are problems. You can obtain a copy of your credit report form any one of the three main credit agencies for free once a year. You can obtain this online and it is well worth checking your report to make sure that all the information is correct, such as your address, accounts open under your name and what is due on each.
When you have prepared in advance it is time to make an appointment with a mortgage borker or banker and discuss what you can afford, and what you are comfortable paying. Often you can qualify for a larger mortgage, but you may not be comfortable with the monthly repayments. So make sure you discuss this with your proposed lender. They should also give you a good faith estimate that shows all the fees as well as the rate including all these fees. Often, unscrupulous mortgage brokers will hide fees, but they have to be disclosed on the good faith estimate. if you do not understand something ask, no question is stupid except the one not asked. And if you feel the broker or banker is going too fast ask him or her to slow down. Repeat back what you think they said to qualify you understand exactly what is being proposed. You should never have to pay for a pre-approval for a mortgage, if asked for funds in advance move on. Once you make a full application, you may have to pay a deposit, but this should be refundable at settlement and this may be used to lock a rate, pay for the appraisal for example. Some fees such as the appraisal you will have to pay and depending on the lender this may vary.
We had a client in the last year who had arranged a laon through a family member and when we looked it over we thought the fees were very high. We got another broker to look over the fee structure and he found $6000 of fees padded into the loan. Needless to say they obtained the loan from soneone else.
Only after all this when you know your price range are you ready to start looking at homes, and a good place to start is the internet, there are many good search sites such as www.realtor.com, and www.trulia.com for example just to name a couple. Our own brokerage has a search engine as do we on our own website that you can use to search for homes. This allows you to look without commiting and without being bothered by follow up. Sunday opens give you an opportunity to see some homes without pressure. It also allows you to see some agents in action and see if you clcik with any of them. Using a Realtor is the next step. A Realtor acting as a Buyers agent represents you and puts your interests above the sellers and even themselves because of the code of ethics they operate under. This is the difference between a Realtor and just a licensed agent. The code of ethics actually hold Realtors to a higher level than the law in many states.
For more information or if you have a question feel free to contact us.