Are you ready to elevate your living with home ownership? Perhaps you are considering buying your first home but don’t know what to expect or where to start? Here are 10 tips to get you started in the right direction.
1. Get a copy of your credit report.
Perhaps one of the most important steps in the home buying process is to know your credit score. According to the Federal Trade Commission (FTC), The Fair Credit Reporting Act (FCRA) requires each of the three nationwide credit companies – Equifax, Experian, and TransUnion – to provide you with one free copy of your credit report every 12 months, upon your request. You can request your report from annualcreditreport.com, the only authorized website for free credit reports, or you can call 1-877-322-8228. Keep in mind, you will need to provide your name, address, social security number and date of birth to verify your identity. You may order your reports from each of the three reporting companies at the same time, or you can order them one at a time.
2. Improve your scores for the best rates:
While it is possible to get a mortgage with scores as low as 580 (and even lower in some cases), the higher your score is, the better interest rate you will get. If you feel like your scores are too low, here are a few steps you can follow that will help improve your scores:
- Pay your bills on time. Payment history is a significant factor. If your credit report indicates you have had late payments, had an account referred to collections, or declared bankruptcy, it is likely to affect your score negatively, so work on paying your bills on time!
- If you are maxed out, pay your balance down. Many scoring systems evaluate the amount of debt you have compared to your credit limits. If the amount you owe is close to your credit limit, it could have a negative effect, so don’t max out!
- Don’t apply for new credit!! I repeat, Don’t apply for new credit! This is a two fold situation; 1) generally speaking scoring systems consider your credit track record. If you have new accounts, that will result in insufficient credit history, and may not be enough information for scoring systems to pull from. 2) whenever you apply for new credit, companies will do an “inquiry”, too many inquiries will also have a negative effect on your score.
3. Get pre-approved before house hunting.
A pre-approval letter has many benefits in the house hunting process. First, it will help you identify any obstacles that will effect your financing, such as low credit, too much debt, or not enough work history. Second, It will help you determine your price range. It is very discouraging when you find a house you like, then realize you cannot afford it. Third, it gives you a definitive edge when making offers. Sellers will consider an offer from a pre-approved buyer quicker than one from a buyer who has not yet been pre-approved. For these reasons, I recommend taking this step at the very beginning your journey. Your real estate agent can recommend a lender that will fit your needs. Please note, there is a difference between pre-approval and pre-qualification. My friend and colleague, Geanie Haithcock with Fairway Mortgage Corporation has more information in this post.
4. See what type of loans you qualify for.
FHA, USDA, VA, Conventional, FHA 203K, Construction, fixed rate, adjustable rate? Which one is best for me? There are many things to consider when choosing a loan so make sure you do your homework, all loans are not the same! A good lender will help you find the right fit for you. Once again, I’d like to share a post from my friend, Geanie that will help you get a better idea of the different types of loans.
5. Hire a real estate agent.
Do I really need to hire a real estate agent? You Betcha! A licensed real estate agent has the education, experience, knowledge, and negotiating skills that will help you get the best deal and make your transaction a whole lot smoother. Plus, most of the time, this is a service that is offered at no cost to you. That is because the buyers agent seeks commission from the selling side of the transaction. So why wouldn’t you hire a real estate agent? Still not convinced? Need more information? I go into greater detail on this subject in this post.
Side Note: This post may contain affiliate links, which means, if you click on or purchase through one of the links, I will receive a small commission at no cost to you. Thank you so much for supporting me! Please see my disclosure policy for more information.
6. Know your downpayment options.
Depending on what type of loan you choose, you may or may not be required to have a downpayment. There are very few loans that are 100% financing, most of them require some type of downpayment. Sometimes, you can receive money as a “gift” to cover downpayment and sometimes you can’t. So, if this is something that you are counting on, make sure you talk to your lender about it up front. Geanie has another great post with more details here.
7. Budget for closing costs and other expenses.
One thing to keep in mind, is that downpayment and closing costs are two different things. When buying a home, in addition to the purchase price, there are some additional costs involved for the buyer. Buyers closing costs include (but not limited to) lender fees, attorney fees, appraisals, home inspections, taxes, insurance, etc. For more information on closing costs, talk to your Real Estate professional and/or Loan Officer.
8. Make a list of must haves for your home.
Picking out your dream home can be an exciting time. You dream of everything from a gourmet kitchen, to an oasis in your backyard. A lavish master suite with designer bathroom. Huge open space with lots of room for entertaining. You even picture certain neighborhoods and school districts. But in reality, it’s not always possible to find a home with everything. So, you must decide on what is at the top “must haves” list, and what you can mark as “nice to have”. Make a list of things such as; How many bedrooms, and bathrooms? How many square feet? What location do you want to be in? And don’t forget your budget!
9. Let your agent schedule house tours.
Most (good) real estate agents are members of a multiple listing service (MLS). While some listing information is available to the public online, real estate agents and brokers pay a fee to belong to the listing service, which allows them to post listings, and see other listings. Plus, they have access to more detailed information about each property not readily available to the public. Through the MLS, real estate agents have the capability of scheduling showing times for house tours. If you see a home, you like, contact your agent and let him/her schedule a tour for you.
10. Search for a house that fits your lifestyle. I.e. work life, school life, kids, pets, etc.
There are many different types of homes and properties: ranch homes, two story homes, condos, townhomes, new construction, fixer-uppers, suburban homes, rural and farmhouse homes. If you would like to own your own place but don’t like yard work, you may want to consider a condo. Perhaps you are a DIYer, you could consider an older fixer-upper home. If you are looking for a quieter, slower paced living maybe you should consider a home in a rural area. Ask yourself these questions; How close (or far away) do I want to be from work or school? Do I want to deal with stairs on a regular basis? Am I a handy man? What school district do I want my kids to be in? And always remember, the characteristics of a home can be changed but the location cannot!
If you are in the Charlotte Metro and surrounding areas, or thinking about relocating to this beautiful state, contact me. I would love to help you elevate your living with home ownership!
Unlocking the door to your dreams,
