For most people, buying a home is the biggest financial investment they will make in a lifetime. Many homebuyers get involved in the process without knowing all the facts and without knowing how all the various pieces fit together. Frankly, qualifying for the mortgage may be the simplest piece of the puzzle, yet it’s where home buyers place most of their focus. The lack of emphasis on the detail can create problems near the end of the buying process.
Still more buyers concentrate on finding someone who will quote them a low rate. But it doesn’t help to have a quote for a 3.00% rate if the loan never closes.
If you plan to buy a home soon, review the list below so you become aware of the critical “who/what/when/where/how”:
- Examine your finances. Be prepared to know exactly how much you have for a down payment and closing costs. And be able to show where those funds are – i.e., in your checking account, in your 401k, under the mattress, from a third party gift, etc. This is a very important piece of getting qualified.
- Before you start the process of looking for a property, find a qualified Mortgage Consultant to discuss what you need to get pre-qualified and to get educated about the buying process. Work with a mortgage professional, not someone who just reads rate sheets. Most realtors will not devote their time showing you properties anyhow until you have a pre-qualification letter in hand.
- Do your own self-analysis of what you are looking for so you can best assist your realtor find you the perfect home. Have a feel for where you want to buy, number of bedrooms, bathrooms, size, new construction, single family, townhome, 2 garage, etc.
- Get organized and begin a file for your home search. Keep records and documents handy. Keep track of contact info for your mortgage professional, realtor, attorney, and others involved.
- Stay in contact and be reachable. Respond to phone messages and email as soon as possible.
- When you locate the ideal home, be prepared to make a “good faith” deposit. This shows the seller you are serious about wanting to buy. This money will be held in escrow and will be credited towsrds your down payment when you get to the closing table.
- Once you find a home, get everything in writing. This is no time to go easy and believe that someone will do as they say. Perhpas they get a short memory of what they said. In that case, the written word is never forgotten. If all the draperies in the home are to be left with the home, then this should be in your contract.
- Get a Home Inspection. Don’t let anyone talk you out of a thorough home inspection. Find your own inspector, not one recommended by the realtor or seller. If the seller agrees to make repairs, get them done before closing and visually inspect to assure they are up to par.
- Shop for homeowner insurance. Get quotes from a few insurers so you know what to expect for this cost. Here’s a tip that 90% of new home buyers are surprised by: Despite the fact that you will probably have your monthly insuranbce premiums escrowed as part of your mortgage payment, you must poay the “first” annual premium out of your pocket. After the first year any future premiums will be made from escrow. This is confusing to some. But think about it for a moment. When you are buying the home, you have no money in escrow to pay the very first premium. You don’t even have a mortgage payment yet in order for there to be an escrow account. This first full annual premium will be shown on your GFE.
- When finalizing your mortgage, make certain you understand all the costs, the type of mortgage loan and how much you will need to bring to closing. Ask questions when anything is not clear.
- Get a Good Faith Estimate (GFE) from your lender. The law requires the lender to give you a GFE once you have provided the lender with the necessary documents to secure a loan decision. The GFE will summarize all the costs involved in the transaction.
- Expect reasonable delays and bumps in the road. Buying a home is a slightly complicated process with a lot of parties involved. Things will happen. Perhaps even on your end.
I hope this helps some readers. Print this list and place it in your home buyer file. If you need to discuss getting pre-qualified, I’m just a phone call away.
Until my next post . .
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