Buying a home is a time of enormous possibilities and involves preparation. Doing some preliminary planning before you begin your home search will make the entire process more manageable and less overwhelming. As part of your initial game plan, you should check and fine-tune your credit rating, get a mortgage pre-approval letter, become an educated buyer and select a REALTOR®.
Check Your Credit Rating and Hold Off on Making Major Purchases
Even if you’re sure you have excellent credit, it’s still wise to double-check at the outset. Straightening out any errors or disputed items now will avoid troublesome holdups down the road when you’re waiting for mortgage approval.
- TIP: Make sure that any outdated derogatory entries are deleted from your credit file. Adverse credit information is not supposed to be reported or included on your credit report after seven years (except bankruptcy information, which can be reported up to 10 years).
- TIP: Hold off on making any major credit card or auto purchases while you’re waiting to apply for a mortgage and until after your closing. Monthly payments you’re obligated to pay will be counted against you, and reduce the amount of the mortgage loan you’ll be offered. Even if you’ve been pre-approved for a mortgage, that approval is subject to last-minute evaluation of your financial situation, and a spending spree for appliances, furniture and other items intended for your new home may actually wreck your chances of buying it.
Pre-qualification Vs. Pre-approval on a Mortgage
A REALTOR® can help “pre-qualify” you for a mortgage before you start house-hunting. This process includes analyzing your income, assets, and debt to estimate what you may be able to afford on a house purchase. Mortgage brokers or mortgage counselors can also calculate the same sort of informal estimate for you.
However, obtaining mortgage “pre-approval” is another thing entirely. It means that you have a pre-approval letter from a lender in hand that is a written commitment to give you a loan, subject to final credit approval and a satisfactory appraisal of the property you wish to buy. Pre-approval will also help speed up the entire mortgage procedure once you’ve found the house you want.
Become an Educated Buyer: Research Neighborhoods, Visit Open Houses and Select a REALTOR®
For local moves, you have the advantage of driving around neighborhoods that interest you and looking for “For Sale” signs. Particularly on weekends, you will see “Open House” postings. Don’t hesitate to walk in, even if you’re not ready to buy yet. Visiting open houses is an excellent way to familiarize yourself with the market and judge various REALTORS® you may meet along the way. You will not be under any obligation to work with any particular REALTOR® that you meet at an open house but it’s a great way to casually interview them, discern their level of expertise and determine if they are a good fit for you.
Your REALTOR® has the ability to set up an “auto prospect” account for you that will automatically email you all homes listed for sale in the MLS that match your housing requirements, including price, location, size and any other needs you may have. With this system, you’re assured not to miss out on a new listing or a price reduction on a home that may end up being the perfect one. This is yet another benefit you’ll receive by working with a REALTOR® from the Dayton Area Board of REALTORS®.
In the event that you’re moving to another city outside the Dayton area, a local REALTOR® can also assist you in helping you find a good REALTOR® in your new destination.
Buying a home can be one of life’s most exciting experiences – and one of the most challenging. The more prepared you are at the outset, the less overwhelming and chaotic the buying process will be. Be sure to utilize the services of a REALTOR® who can help guide you through the home buying process. A REALTOR® with the Dayton Area Board of REALTORS® is trained to help you make your housing dreams become a reality, so contact one today.
