Buying a home is usually a very exciting event that most people look forward to. Whether you are looking to buy a home for you to live in, a vacation home or an investment property, most people think positive thoughts when they think about buying a property. However, as many homeowners will tell you, the homebuying process can sometimes become a quite stressful experience filled with many bumps and hiccups along the way. This is because it can be quite an involved process with many moving parts. To those who have never been through the process before ( and even to some that have) the homebuying experience can be a little overwhelming. Indeed, if you begin moving foward with purchasing a home when you are not sufficiently prepared to do so, you will most likely become one of those people who looks back and categorizes their homebuying experience right up there with the time they had to go to the dentist to get their tooth pulled. On the otherhand, if you are prepared and know a little about the homebuying process when you begin moving foward on your journey to purchase a home, your experience could be quite an enjoyable one.
Today I am going to be giving you some advice on how you can help ensure that your homebuying experience ends up being a good one. Specifically, I will be laying out the what I call the "Three Step Approach to Prepare You for Purchasing a Home." I know...the name is very creative. If you adhere to these steps though, your homebuying experience will most likely be a much better one. So without further delay, let's begin.
Step 1: If you are obtaining financing to purchase your home, meet with a lender to discuss your home purchase 3-6 months before you plan to purchase a home.
If you are obtaining financing to purchase a home it is a very good idea to meet with a reputable lender or mortgage broker well before you are actually planning to purchase a property. The reasons for this are many. First off, it will give your lender the opportunity to check your credit and analyze your finances which will help them determine how much of a loan that you can qualify for. This information is very important to know before you begin looking for a home, because it will set a price range for you to stay within when you are searching for a property. What if you have been looking at properties in the $200,000 range for a month, and then you find out you can only afford to purchase a home up to $165,000? Well, you have just wasted a whole lot of time, gas and energy that could have been better spent looking at homes that you are actually able to purchase. This can lead to frustration but can easily be avoided by finding out a head of time how much of a loan you can qualify for.
In addition to this, if while meeting with your lender you discover that there is something that might be holding you back being able to obtain a home loan to purchase a property, the lender can tell you what is holding you back and may be able offer you some advice on how to fix the issue so you can qualify for a home loan. If you find out this information early on, you probably have a good chance to fix the issue by the time you are ready to purchase a home. For example, a lot of the time people discover that their credit score is lower than they expected which renders them unable to get a home loan. Your lender can review your credit score and report with you and offer you helpful tips on how you can build your credit up quickly to where it needs to be in order to get a home loan by the time you are planning to buy. On the other hand
Also, when the lender meets with you to determine how much of a home loan you can qualify for, he is going to evaluate your income and expenses. By the lender knowing this information ahead of time, he can give you advice on things you should and should not do to help ensure that you are approved for a home loan. If you are approved for a loan, he may be able to tell you how much you might have to increase your income or how much you have to reduce your current expenses so that you will be able to qualify for a certain amount of money. For instance, let's say you knew that you wanted to buy a home in the $150,000 range, but you currently only qualified to buy a home up to $135,000. The lender could tell you how much you would have to reduce your expenses so that you could qualify for a home loan up for a home up to $150,000. If you knew this information ahead of time you could begin making strides to reduce your expenses so you could get the loan to purchase a $150,000 home by the time you are planning to buy. Also, if you found out that you had to save more money than you thought for a down payment, you would have time to save up if you found out that information well before you were planning to buy.
Finally, it is important to meet with a lender well before you purchase a home because it will allow your lender to educate you about all of the different loan programs available and match you up with the best loan program to fit your needs. For example, are you looking to purchase a home that is in a rural area or that is on the outskirts of town? If so you might be eligible for the USDA Rural Development Loan which would enable you to get 100% financing without having to pay any monthly mortgage insurance premiums. Or, are you are a first time homebuyer? If so, you might be eligible for one of several downpayment/closing costs assistance programs.
Finding out about all of the different loan programs ahead of time is also useful, because there might be certain steps you have to take (which might take some time to complete) in order to be eligible for certain loan or downpayment assistance programs. For example, if you are a first time homebuyer and want to qualify for a first time homebuyer downpayment assistance program through The Tallahassee Lender's Consortium, you have to take a class on homeownership before you can qualify for the downpayment assistance.
Having a lender match you up with the best loan program to fit your needs is important because it could save you lots of money over the long haul.
That's it for today, tune in next week for Step 2 in the "Three Step Approach to Prepare You for Purchasing a Home" which has to do with the importance of learning about the local real estate market where you are planning to purchase a home before you buy a home.