You have been thinking about a new house for a long time and finally decided to take the plunge, so you pick up the phone and call your local real estate office...right? Not quite yet. There are a number of things to get in order first to make home buying go as smoothly as possible and to make sure you get the most home for the best rate. Where do you start?
Check your credit score and clean it up if needed.
This is the number one thing you need to know before you even think about what you can get for a house. You need to know if there are errors you can easily clean up with an explanation to the credit bureau or if you need to do some more work to raise that score. The national average credit score is around 695, but a 740 will get you the best rates. However there are several programs to help you get a home loan with a much lower credit score. So once you have done some work, don't let a lower score deter you. Check your score here: https://www.annualcreditreport.com/index.action
Figure out how much home you can afford, and how much you WANT to afford.
There are a number of mortgage calculators available on line that allow you to plug in a home price, interest rate, insurance, taxes and estimate what your monthly payment would be. You may qualify for a much higher loan than you would be comfortable paying monthly. Know what you want to spend before you look at homes so you don't end up with 30 years of buyer's remorse. Here is a handy calculator: https://www.mortgagecalculator.org/
Save up for a down payment.
The best rates and easiest loan to buy a house with is a conventional loan. That type of loan usually requires 20% down and your credit score can be as low as 620 with most lenders. You can buy nearly any house with it "as-is". But there are other programs that require no down payment at all. They have more stringent appraisal guidelines and inspection requirements. The condition of the house could cause the lender to turn it down.
Shop for a mortgage lender and get pre-approved.
They aren't all the same. They tend to have access to different lenders with different rates and programs. Don't be afraid to shop around for the best rates. Your local bank may be more willing to work with you if they know you and you have developed good rapport with them even if your score is lower. Using the biggest names on the internet may be easy, but you will not always get the best rates or personal service, and they will likely sell your loan off in the near future to another lender. Those secondary lenders can be hard to get ahold of and work with.
DON'T BUY ANYTHING!
This is SO important. Once you are pre-approved DON'T BUY ANYTHING! Don't get a couch, new car, department store credit card, small loan, big loan, ANYTHING! The smallest inquiry on your credit report could cause you to be turned down (regardless of your "pre-approval" status) right before closing. The lender will run another credit check on you right before the final closing and see changes. People have walked away from the closing table after staring at the keys and garage door opener to their dream home with out them, because they couldn't wait and bought the new living room furniture on credit the week before closing. Just...don't.
Make a wish list.
Do you want 3 bedrooms and 3 bathrooms, a master suite with en suite and a walk in closet, a double attached garage? Can you do stairs? Do you like to mow? Want a swimming pool? Would you like a walk in pantry and a center island? Do you like granite and are you willing to provide the upkeep for it? How much time do you want to spend outdoors? Is a large patio or deck important to you? Now break it down into deal breakers or just "wants" so your real estate agent knows what to avoid. You won't likely find a home with everything on your list, but a good real estate agent always wants to get close.
Find an agent to represent you every step of the way!
A buyer's representative is invaluable! And 99% of the time, at no cost to the buyers. They have access to listings from multiple services. They are getting notified of new listings immediately. They talk to other agents and know of listings often before they are even listed. They can look up old expired listings. They are skilled negotiators. They know their way around the pages and pages of legally required disclosures and the 12 page purchase agreement when it comes time to write up an offer. They will drive you around for miles and miles on their own dime until you find a home. How do they get paid? At closing, their percentage comes from a percentage of the seller's agent's fee. Basically the seller's agent is saying, "Thanks for bringing a buyer to my house!" They will ask you to sign a "Buyer's Representative Agreement" to give them the exclusive right to represent you. This protects you with the highest level of representation, and it protects them with a guarantee that, if you buy a house in the end, you do it with their help after all their hours of trying to help you find your dream home.
Let's find you that dream home! Call Kuhlmann Real Estate, Inc as soon as you are ready and we can get you from start to finish. Our team of trusted professionals has been serving southwest Minnesota since 1963.
(320) 269 6481