1. Educate Yourself on the Home Buying Process
Knowledge is Power. The more you know about buying a home, the better
decisions you will make. Learn all you can about Mortgages, Homeowner Expenses,
Family Budgeting, Home Inspections, HOA’s and what you can and can’t do,
Builders, Insurance and many other subjects. I have been a Real Estate and Mortgage
Business since 2003. I have a completely different perspective than most
Realtors. I offer FREE one on one classes to cover all these topics at length.
2. Hire a Realtor Who Works for You
20% of the Realtors do 80% of the Business because they operate
like a business. Many Realtors just see a paycheck. Their focus is on their
paycheck and not the well-being of their clients. There are many deadlines in a
purchase contract and missing one can cost you your dream home. Real Estate Agents
need to know everything there is to know about a home before they show it to
you. Before you hire a Realtor, sit down with them and let them explain the
Home Buying Process to you. They either know what they are talking about or
they don’t. Don’t use a hobbyist to make the largest Investment of your life.
3. Have a Family Budget
Mortgage Lenders base your loan approval from what shows up on
your credit report. There are many monthly expenses that don’t show up on your
credit report such as utility bills, childcare, taking care of your parents and
many others. Make out a real budget that includes every expense you have. I can
help you with this.
4. Don't Buy More House Than You Can Afford
This is the BIG ONE to me. I have seen so many
buyers think they must have the biggest and the best house. I have seen Real
Estate Agents and Mortgage Lenders try to push buyers into more house than they
can afford. Being House Broke is no fun, speaking from Experience. I have seen
foreclosures and divorces caused by this problem.
Just because you Qualify for a $400,000 Home
doesn't mean you can afford it. There are many obligations that don't show on
the credit report. Make yourself a real budget and include everything from car
insurance to groceries. Now you know what you can readily afford.
5. Don't Drain Your Savings
Spending all of your savings on down payment
and closing costs is one of the biggest mistakes you can make. There are many
costs associated with buying a home, not just the down payment. A 20% Down
Payment might keep you from paying Mortgage Insurance but can cause you to be
You will need 3-6 months of living expenses in an emergency
fund. A large down payment will cause stress you don't need, when you have many
6. Don't be Careless with Credit
Lenders pull credit reports at preapproval to
make sure things check out and again just before closing. They want to make
sure nothing has changed in your financial picture. Any new loans or credit
card accounts on your credit report can jeopardize the closing. Buyers,
especially first-timers, often learn this lesson the hard way. In my entire
career, any client who purchased a car doing the loan process, did not close on
their home. Most new car payments will knock you out of your debt ratio for
your home loan.
7. Know the Hidden Costs of Homeownership
Besides the monthly Principal and Interest
Payment, there are several other costs you need to be aware of. As a new
homeowner, you will pay property taxes, mortgage insurance, homeowners’
insurance, hazard insurance, repairs, maintenance, utilities and deposits to
name a few. You will also need appliances, furniture and window treatments.
The average homeowner pays about $2,000 annually on
Maintenance Services. Not having enough money in your Emergency Fund can put
you in the Red very quickly. You need to set aside 1-2 % of the purchase price
of your home for repairs and maintenance expenses.
You have to have a Monthly Budget Plan before you ever buy a
home. You have to include daycare, groceries, fuel and many other items. You
will realize the amount the bank approves you for, is not what you can
realistically afford. Don't be forced into a house you can't afford. I will be
happy to help you with a Monthly Budget Plan.
8. Get Pre-Approved for a Mortgage
Most Lenders will give you a Pre-Qualifying Letter. It’s nice to
have, but it won’t buy you a house. A Pre-Qualifying Letter just means they
looked at your credit and credit scores and everything looks good. So many
things can pop up on Bank Statements, Paycheck Stubs and other research after
you receive a Pre-Qualifying Letter.
Make it easy on yourself and ask for a Pre-Approval. They must
work a little harder and you must wait a little longer, but it is Peace-of-Mind.
Everything you stated is proven and an Underwriter will review your Documents
and sign off on it. This is as close as you can come to a Cash Buyer.
9. Always Get Estimates From At Least Two Lenders
I always recommend getting quotes from 2-3
Lenders. Compare Rates, Lender Fees and Loan Terms. Always pay attention to
customer service in the process. If you are getting the runaround and phone
calls not getting returned, you will have a BAD Home Buying Experience. Lenders
are very competitive in the area, and they always know what the other is doing.
10. Down Payment Assistant Programs
There are many 0% Down Loans available along with Down Payment
Assistance Programs. Don’t be cash strapped when you move into your new home.
Contact Me and I can discuss all the programs that are available. I can put you
in touch with Mortgage Lenders who will always put you first!