Tips for Home Buyers
TIPS FOR HOMEBUYERS
Spring is right around the corner!! This is the time when most people start thinking about buying a new home and for first time homebuyers they are extremely excited, nervous, anxious and possibly confused about where to start. The process of buying a home can become overwhelming whether you’re a first time homebuyer or someone who is looking to sell their home and buy another one. For those of you who have lived in your home for over 10+ years, the home buying process has changed dramatically so this article is also for you!
With my first year of real estate coming to a close and with my 15 years with mortgage experience under my belt, I have found that there are some key issues that homebuyers are running into. And to help you out, here are some tips for you as you venture into the fun times of buying your next house!!
- Where do I begin?? The first thing you need to do prior to looking at houses is to check with your local bank or lender to see how much you can afford. Your lender will let you know how much you can spend on a house based on your income and your current debts, also known as your debt to income ratio. The lender will calculate what is left over for a house payment. CAUTION: Your lender may give you a housing payment that you may not feel comfortable with or you may think is too high but keep in mind, it is still your decision as to what you are willing to pay.
- Do I need to be pre-qualified or pre-approved prior to looking at houses?? The answer is “NO”, however, it is highly recommended that prior to looking at homes to get at least pre-qualified. The reason is because with being pre-qualified or pre-approved, you know the price range of houses that you can look at.
- What is the difference between a pre-qualification and a pre-approval?? A pre-qualification is when your lender has pulled your credit and has determined your credit worthiness. And based on the information you have given your lender regarding your income and assets, the lender will determine how much of a house payment you can afford.
A pre-approval is basically the same thing as a pre-qualification but instead of relying on the information you have given them, they have actually gathered up the necessary documentation to determine an amount you can spend on a house. That documentation may include, but not limited to:
- One months’ worth of paystubs – showing current year to date information for all buyers
- 2 years of W-2’s from all income sources and for all buyers
- 2 years of tax returns for all buyers
- 2-3 months’ worth of bank statements
- Copies of driver’s licenses for all buyers and social security cards
This is just a general list that most lenders will be asking for. However, other life situations may require more documentation, such as divorces, student loans, judgments, etc. Please consult your mortgage professional for more details.
4. How much money will I need?? When working with your lender, they will discuss all of your options when it comes to how much money you will need for closing. Some lenders have No- Money Down programs like WHEDA, VA and Rural Development/USDA loans. Some lenders also have low money down programs like FHA and some conventional loans that only require a 3% down payment. Please discuss your options with your lender.
5. Do I need a real estate agent to buy a house?? Technically, no you don’t. But let me ask you this, would you represent yourself in a court case without the representation of a lawyer? As a homebuyer, you need an agent that will represent you and your needs and will negotiate on your behalf. Here is what a buyer’s agent can do for you. They will listen to your goals and what you are looking for in a home, the desired neighborhoods, and the price of home you are looking for and whatever else you may want in your new home. Your agent will help you with your search, show you any home you want to see and help you write your offer. There is so much more we help you with – too much to type!! But when the time is right for you to choose your agent, look at it like you are an employer hiring an employee. You should interview a couple of different agents and find the best agent that will represent you the way you wish to be represented and that best fits your personality.
Finding a home should be fun and exciting and not a scary process. When out looking for homes and also financing your home, team up with a real estate agent and lender that you are comfortable with and can help you achieve your dream of homeownership.
If you have any questions, please feel free to contact me at 920-540-7439.
HAPPY HOUSE SHOPPING!!!