Wednesday, February 29, 2012
Happy Leap Day!
I know I'm supposed to post these for Money Mondays, but computer issues have kept me from doing so - but hey, better late than never right? Right. Let's go!
How to be a Serious Home Buyer...by Austin the Realtor
So…you wake up one morning and decide you are tired of renting and you want to own your own home. You go to your computer and search homes. You find some you love and call to make appointments. You do this for 3 months and finally fall in love with your dream home. You contact your bank and guess what? You are not approved for the amount of the home! You just wasted 3 months!
The above is a typical approach to home buying, but it’s the WRONG approach. Would you go grocery shopping without knowing how much money you have to spend? Probably not. Many believe that they "have good credit” and this is enough to qualify for a loan. Just like any other venture, you must do your research.
Get pre-approved! This serves multiple purposes. It lets you know what the bank will lend you and you know what price range to shop in. You can also determine an estimate of your monthly payments and determine if these payments are in your budget. I like to advise buyers to do what I call a “reverse pre-approval.” This means after you get your pre-approval from the bank, determine the monthly payment you are comfortable with and ask the bank what that payment equates to as a purchase price. This is your limit. Start your search here. Pre-approvals also let sellers know you are a serious home buyer and will be more willing to negotiate with you. Some sellers will not even take the time to show a home unless the buyer is “qualified”.
Next - happy house hunting.
Once you find a home you are interested in, determine an offer you would be willing to pay for the home and present it to the homeowner. If accepted, stop there. Schedule an Inspection. An engineer may find things you cannot see with the naked eye. (i.e. bad plumbing, termite infestation, rotting wood, poor foundation). Once you receive your engineer's report, discuss with your attorney and determine if the property is still worth purchasing. You may want to reconsider your offer if major work needs to be done.
Once you are satisfied and contracts are signed, begin the loan process. Since you are pre-approved, you should be comfortable that your loan application will go through. If you left out important financial information that can be a detriment to you, this will surface during the underwriting process and may cause your application to be denied. In other words, be honest!