With the spring here, there is not a more appropriate topic than home buying. This blog is my intention to educate you on home buying. Home shopping is not as simple as it sounds, as it requires careful planning, saving, and desires. There are many factors that go into buying a home and lets start off with careful planning.
Careful home planning includes:
- Savings
- Debt management/credit reporting
- Location
- Type of property
Savings
Savings is obvious. There are programs marketed to clients with down payments with as little as 3% down payment. However, many have income limitations or some have location requirements. Many loan officers do not know the amount of income, loan amount size, or location requirements so ask the questions up front. You can always reference FNMA, FHLMC, VA, and FHA as well as portfolio banks in your area. You would be surprised at the programs out there. For example, there was one program I financed a couple with a program that was 1% below market and no income limitation.
Debt Management
Have a “hard” credit pulled and not a soft credit. Why? A soft credit pull generally only pull from one credit bureau, which may not have all your debts listed, and the hard credit provides you with three credit scores. I’ve had soft credits with a credit score of 760 but the other credit scores that showed up on a hard pull the remaining two credit scores scored below 700. That being said, you may not qualify for a program, pay a higher rate, and/or have lates, charge-offs, or collection accounts that need to be settled.
Location
You’ve heard it a million times: location, location, location. How far do you want to commute? Do you want an urban setting or a suburban setting? Do you want to live in a town offering various services other towns/cities provide? Schools? Do your homework with a trusted Realtor.
Type of property
Type of property refers to whether you want a condo, single-family, two-family, or three family property. If you want to avoid outdoor yardwork and little maintenance maybe a condo is for you, single family to satisfy the you or your families needs, a multifamily where you can collect rent to assist you with your mortgage payment.
Tips:
For condo buying, you should ask how much the condo fees are and the amount of money in reserves and see if there are any assessments.
I highly recommend speaking with a real estate attorney if you want to buy a multifamily property to learn your landlord’s rights.
In conclusion there are many factors for homebuying. There are also many professionals involved in the home-buying process:
- Loan officer
- Buyers Realtors
- Sellers Realtor
- Home inspector
- Buyers legal representation
- Sellers legal representation
They all are part of the process, and it requires excellent communication and timing to manage expectations during the application, negotiation, inspection, and closing processes. Always be proactive. Let me know how you liked my blog on home buying.