Owning a home is the American Dream. It is a great way to create wealth – a nest egg for retirement or to pass along to family. The decision to purchase a home is one filled with excitement, emotion…and trepidation.
How much can I afford? Where should we look?
What about financing? Should I sell my current home first?
And rightly so, the purchase of a home is the largest financial transaction most of us will make!
Buying a home requires thoughtful planning as well as a support team of reliable experts including a licensed real estate professional to help guide you through the process – insuring you make the best, most informed decisions in this very important purchase decision.
1. Get your Financials in Order.
The higher your credit rating, the better interest rate you will qualify for. The difference in a 4.5% interest mortgage and a 5% interest mortgage can mean tens of thousands of dollars over the life of a loan. Start by obtaining a free copy of your credit report from the US Federal Trade Commission (FTC) at www.ftc.gov so you can see what lenders can see. Pay off credit cards and resolve any credit disputes or delinquencies.
2. Get Pre-Approved.
Know how much you can afford before you start looking. Are you selling a home? How much equity do you have? Use an online tool or consult a real estate professional to review comparable homes in the area. Apply to several lenders within a two-week period so that the inquiries do not impact your credit report. Be careful that you don’t accidently get pre-qualified instead of pre-approved. There is a difference. Pre-qualified is only an estimate and doesn’t mean you will necessarily get the loan.
3. Make a List of Priorities.
Take inventory of your family’s priorities in a new home. Go beyond bedrooms, bathrooms, location, and school zone. Carefully consider your family’s lifestyle and activities. Entertain out of town guests and family often? Enjoy or maybe you don’t have time for yard work? How long do you estimate you will be in the home? Will your family size be changing? What about aging parents? Be sure to go into great detail with your realtor.
4. Find a Real Estate Agent.
Realtors are professionals who are trained in real estate law, property rights, deeds, financing, mortgages, and other subjects that are very important when buying and selling. They can provide peace of mind through all of the daunting decisions and steps along the way. All realtors must be licensed but note additional qualifications such as training and certifications to identify the ones that go above and beyond the minimal requirements. Experience and reputation are important factors to consider as well as the broker the realtor is associated with. Realtors can be great resources of information as many times they are aware of properties that are about to be listed – before the listing is public. They can also be helpful in referring other qualified professionals needed when buying, selling, and moving.