1. Check your credit report and fix any errors.
Since you most likely will need to get a mortgage to buy a house, you
must make sure your credit history is as clean as possible. A few
months before you start house hunting, get copies of your credit
report. Make sure the facts are correct, and fix any problems you
discover. You can get copies from all three
credit bureaus at once by visiting www.AnnualCreditReport.com. Mortgage
lenders will review your credit with a fine-toothed comb, so you should
do the same ... before they review it. If you find an error on
your credit report, go to the company's website where the report came
from (TransUnion, Equifax or Experian) to contest it. It can take time
to clean up an erroneous credit report, so get started as soon as you
spot the error.
2.Get professional help. Even though the Internet gives
buyers unprecedented access to home listings, most new buyers (and many
more experienced ones) are better off using a professional agent. Look
for an exclusive buyer agent, who will have your interests
at heart and can help you with strategies during the bidding process. 3. Aim for a home you can really afford.
The rule of
thumb is that you can buy housing that runs about two-and-one-half
times your annual salary. Work with your lender or Realtor to get an idea of how much you can afford to pay each month,
and what that equates to in terms of a home price. This will give you a
budget to work from, which will help you weed out the homes that are
beyond your comfort zone. 6. Start saving your cash.
This is one of the best things
you can do before starting the home buying process, for a couple of
reasons. First of all, mortgage lenders like to see that you have some
cash reserves on hand. Secondly, you'll need cash reserves for any
unexpected fees or costs that might arise (which is common). 7. Get pre-approved for a loan.
Getting pre-approved will you save yourself the grief of looking at
houses you can't afford and put you in a better position to make a
serious offer when you do find the right house. Not to be confused with
pre-qualification, which is based on a cursory review of your finances,
pre-approval from a lender is based on your actual income, debt and
credit history. 8. Avoid new lines of credit.
Try to keep your financial
situation as "stable" and favorable as possible. It's a good idea to
pay down some debt (see item #4 above) and to save up some cash. But
the worst thing you can do is take out a new loan / line of credit. At
best, this could make the qualification process take longer. At worst,
it could tip the debt scales into the "greater than 20%" zone, which
will make it harder to get a loan. 9. Validate the asking price.
It's called an "asking
price" for a good reason. No asking price is set in stone, and
everything in real estate negotiable. So don't accept an asking price
as being reasonable until you validate it through careful research.
Compare the home / price to recent sales in the area. Your real estate
agent can provide a comparative market analysis (CMA) to help you with
this step. 10. Get a home inspection.
Sure, your lender will require a home appraisal anyway. But that's just
the bank's way of determining whether the house is worth the price
you've agreed to pay. Separately, you should hire your own home
inspector. His or her job will be to point out
potential problems that could require costly repairs down the road. |