Although it´s tempting to dive in and begin searching for your dream home, serious buyers know it´s usually better to begin with some budgeting. If you're like most people, you will be financing some portion of your home. But how much mortgage is right for you? How much house you can afford generally depends on four things:
Homekeys® has tools to help you make better buying decisions. Check out all Homekeys® purchase and refinance calculators under the tools section of our website:
Balance your personal and family goals with a sound financial strategy. Go ahead and pursue your dream home, but first run the numbers to avoid financial nightmares. After setting your budget, you can make better decisions on what kinds of homes to look for. House or condo? The answer is a combination of what fits your budget and your family´s specific needs. Next, it´s time to make sure your credit is up to par.
As a rule, borrowers with higher credit scores qualify for the lowest available rates. Before applying for a mortgage, be sure to check your credit and try to fix any issues.
It´s best to request credit reports several weeks before applying for a loan, but some credit problems are minor and can be fixed fairly quickly. When you receive your credit report, verify that all the information is accurate. Be sure that information like names, addresses, dates, employment history and account numbers are correct.
What´s the difference? Being pre–qualified is like standing in line at the ticket window, while pre–approval means you have reserved seats to the show. Pre–approval demonstrates to sellers that you can afford their home, and boosts your credibility and negotiating strength.
Pre–qualification provides a general guideline of the loan amount a lender is willing to provide. It does not constitute a final loan approval. Pre–qualification is a positive step, but it does little to prove to sellers that you can afford to buy their property.
Pre–approval means you have completed a loan application, had your credit checked and that a lender has approved your loan for a specific amount and interest rate. You can then present this document to a seller as proof that you can afford his or her property. Pre–approval helps signal to sellers that you are making a serious offer. Be aware that final approval may depend upon property appraisal, existing liens, inspections or other factors.
It´s easy to get pre–approved by a mortgage lender. Start as soon as possible.
Today, the majority of buyers begin their home search online at real estate Web sites like www.Homekeys.com. The reason is simple … in minutes, buyers can research hundreds of properties and quickly eliminate those that don´t meet their needs.
Your home search on the Web probably has turned up several properties that meet your general criteria such as beds, bath and square footage. Now it´s time to compare individual homes to see which one best meets your needs. At this point, there are steps buyers should take for more effective comparison shopping, and to limit the “emotional buyer” syndrome that can lead to overpaying and buyer´s remorse. Here are some key points for smart buyers: Have your priorities straight before visiting a house. For example, square footage may be up for debate, but not school districts or security systems. Knowing what´s most important in advance will keep your house visits on track.
You´ve gotten pre–approved for a mortgage, found a home and you´re ready to make an offer. But how much should you offer? With today´s powerful online tools or the help of a Homekeys® Realtor®, buyers can estimate the values of a property they are interested in.
Approaching negotiations with a confrontational “win–at–all–costs” attitude is unlikely to yield positive results. Many professionals who teach executive negotiation skills say a more realistic goal is to find a mutually beneficial solution in which both parties can “win.” This means being aware that you may have to sacrifice something to reach agreement at some point. In this case, be sure to identify in advance what you will and will not give up to ensure you´re happy with the deal in the long term.Back up your offer
When offering to buy a property, you don´t have to explain how you arrived at a particular dollar amount. But you may fare better in negotiations if you have some objective basis, such as examining comparable sales.
The best way to show a seller you mean business is to accompany your offer with a purchase contract and a substantial “good faith” deposit. For your protection, be sure to place any deposit into escrow with an attorney or title company rather than providing funds directly to the seller. As a courtesy, Homekeys® can refer you to professional providers of title services in your area.
You should be prepared to walk away from unacceptable terms. You may be reluctant to give up after all the time you´ve invested in the buying process, but emotionally tense negotiations can sometimes benefit from a cooling–off period. Walking away (or watching the other party walk away) may be uncomfortable, but it is always preferable to accepting terms you can´t live with.
After you have decided how much to offer, you must make some decisions regarding the sales contract. Typically, serious offers to buy are presented in the form of a sales contract with a “good faith” deposit. In addition to hiring an attorney with real estate experience to prepare their contracts, independent buyers and sellers have several available options: You can find a standard “Sale of Real Estate” contract on the Web or at an office supply store. This is the most inexpensive route, but probably also the riskiest. The quality of these one–size–fits–all contracts varies widely, and they may cover only the fundamentals needed to complete a very simple real estate transaction.
Let Homekeys® do it for you. As part of our service, we will prepare sales contracts for buyers that wish to make an offer on a property.
About “write–ins” – Careful! Changes written in to contracts by buyers and sellers may not be legally binding. Consider having the contract reviewed by an attorney with real estate experience to ensure any written changes are legal and acceptable to both parties.
In the process of purchasing a home, some buyers get so caught up in price negotiations that they overlook the importance of getting the right mortgage. Paying careful attention to mortgage and closing costs can help you to save on your initial and ongoing monthly expenses. Smart buyers should begin researching the various types of loans and terms available and learn which options best meet their needs. You can get a loan through banks, credit unions or a mortgage broker.
Note: While you are evaluating lenders to find the best financing for your need be sure you understand:
In addition to providing a loan, your mortgage lender should also help you understand your options and help you choose the financing and terms that best fit your needs. Don´t be afraid to ask questions.
Note: Buyers and sellers must agree on a mutually acceptable date to close the sale. Buyers should make sure the closing date occurs before any established interest rate lock-in period expires.
Because of inspections, approvals and appraisals taking place in the days before closing, many issues naturally surface at this stage. As a buyer, you should expect that some problems will arise, and remain patient when they do. In fact, some issues can work to the buyer´s advantage. For example, suppose an inspection reveals that significant roof repairs are needed. To preserve the sale, the seller may repair or replace the roof, or provide a significant break in sales price. Here are some other steps you can take to prepare for a successful closing:
Let our experienced local REALTORS® help you buy your next home