by Jeremy Kushner
(Miami Beach, Florida, USA)
Buying a home is a very stressful process under the best of circumstances. There are countless factors involved which are beyond the control of anyone involved. However, if you get prepared properly ahead of time, you can have a smooth closing almost every time.
The very first step in getting prepared is to order a copy of your credit report. Don’t go pulling out your credit or debit card to pay, however. The government required the three major credit bureaus(Equifax, Experian and Transunion) to set up a website to provide everyone with one free copy of their credit report each year. Go to AnnualCreditReport.com and you can order your report for free. You will have to know a bit about what is on the report in order to identify yourself, but the process is fairly easy.
Once you’ve made sure your credit is okay, then you need to find a lender to help you determine how much of a loan you qualify for. Gather your financial information and sit down with a loan officer to get pre-approved.
Once the loan officer has accurate information from your paycheck stubs, W2s, or tax returns and your account statements, the lender can get an automated approval for the maximum loan amount and sales price you qualify for.
Once you have that figure, drop the price down so that you will have a house payment equal to 25% of your take home pay. This will guarantee that you don’t run into financial trouble even if maintenance and repair costs are higher than you expected.
Although your loan officer will get an automated underwriting approval with the minimum down payment, do everything possible to save or gather (sell your motorcycle, your bass boat etc.) as much money as you can for extra down payment and to cover closing costs.
The more money you have available, the better deal you will get from your lender and maybe even from the seller.
Once you have your financial ducks in a row, and you know what price range you should be shopping in, you can now put some serious thought into what type of house you want and what sort of neighborhood you would like to live in.
Another step that will help make your home buying process smoother is to hire a buyer’s agent to represent you. All the real estate agents with signs in front of houses and homes for sale in the real estate ads represent the seller. They have what is known as a “fiduciary duty” to protect the seller’s interests over yours. You can counter this by hiring an agent specifically to represent you. Ask friends and family for recommendations and then interview a few buyers’ agents to find one that is good and that you are comfortable with.
When a real estate transaction goes wrong, it usually goes very, very wrong and damages everyone involved. Use this advice to lay a solid foundation before you start looking at homes and making offers and you can make your real estate purchase go smoothly.