The more you plan, the better chance of finding and affording your dream home.
There are some things out there that are fun to buy “on a whim.” There’s a certain thrill to the occasional impulsive purchase, as long as it’s affordable and makes sense. Of course we can encounter trouble or worse, buyer’s remorse when the impulsive buy includes a very large item that we may or may not be able to afford. A home purchase however, should not be made impulsively.
Plan Early, Plan Often
Many people compare a home purchase to buying a car; where you swing by a lot, take a test drive or two, then hammer out the details on the vehicle of your choice; usually ending up with driving it home by the end of the day. In a home purchase, the more forethought you put into the planning and execution, the better your chances are of truly getting what you want. Here are some steps you definitely want to take before you begin leafing through the Multiple Listing Service.
1. Make a home buying timeline.
Hopefully you’re not in too big a hurry to purchase a home. The more time you plan, the more solid the goals you can set to buy the home you want.
2. Obtain your credit report.
You need a starting point, and that starting point should involve one of the main items that lenders regard when approving your home loan. You are allowed one free credit report by going directly to any (Or all) of the three main credit reporting agencies: TransUnion, Experian, and EquiFax. Each of these organizations have options to pay for ongoing access, but you can request your free report by contacting them directly.
Upon obtaining your credit report, make sure there is no derogatory information that is incorrectly attributed to you. Contact the reporting agencies directly to resolve any issues. By the way, requesting your own credit report does not count as an inquiry, so it will not lower your score.
3. Make a solid assessment of your finances.
Taking the guesswork out of your money situation will help you, and your agent, in putting a plan together to achieve your real estate goals. Knowing your gross income, and what your expenses are, will give you an understanding of the financial items you need to work on to make sure you’re prepared and qualified to obtain a loan.
4. Now that you know where you’re at financially, make a plan to get those finances “Home Purchase Ready.”
These plans include saving as much money as possible, and reducing your credit card debt to at least 30% of your outstanding balances. You do not need to have zero balances on your credit cards to qualify for a loan, but the debt-to-limit ratio must be within reason.
5. Money in the bank.
If you’re transferring larger sums of money into an account to use as assets in the home loan qualification process, do so NO LATER THAN two months prior to beginning your loan application process. Your lender needs to see a “seasoned” and established savings account, which will help you in the long run.
6. Have your lender pull your credit only when you’re ready.
Unlike obtaining your own credit report, when a lending institution runs an inquiry on your report, it may drop your score slightly. Have your lender pull your credit only when you are ready to start the loan application process.
7. During your loan application and escrow process, DO NOT:
-Make any large purchases
-Quit your job
-Obtain any new credit
-Move or transfer large sums of money to or from your bank account (Unless directed to do so by your lender)
Montemayor and Associates can help you plan your strategy to buy the home of your dreams. Contact us by calling either of the numbers listed at the top of this page, or by using the Quick Response form below.Email Contact Form