So you’ve decided now is the time to buy a home. What should you do? How do you get from “For Sale” to “Welcome Home”?
Recruit Your Team: REALTOR© and Lender
The top two professionals you will use during your home buying process are your REALTOR©and your mortgage lender. Interview your proposed REALTOR© and lender, and make sure of the following:
- They listen to you.
- They understand what you want and do not push you in a different direction.
- They are knowledgeable about the local market and their business.
- They will tell you the truth, even the bad news.
If the first people you interview are not quite right, don’t be afraid to keep looking. Your REALTOR© and lender need to be dedicated to YOUR interests, and you must feel comfortable being completely open with both people.
Check Your Credit
Everyone loves looking at homes, but don’t start with house hunting. Instead, you want to check your credit. You are allowed to order one credit report per year from each of the three main agencies: Equifax, Transunion, and Experian. You can request these free credit reports from www.annualcreditreport.com. You can also order your credit scores. The FICO credit scores range from 350 to 850, with the following categories:
- Excellent: 750+
- Good: 700-749
- Fair: 650-699
- Poor: 600-649
- Bad: Below 600
You want your credit score to be as high as possible; this will give you more options as to loan types, and will also reduce your interest rate. If you need to repair your credit to bring up your credit score, you can work directly with each vendor or even reach out to your preferred lender for advice. Expect this process to take between 30 and 90 days.
Once you are ready to start looking, work with your lender to obtain your pre-approval. This process will tell you how much home you can afford. Your lender can either pre-qualify you orpre-approve you to a certain amount. What is the difference?
If you are pre-qualified, the lender has asked you about income, debt, and other things, and used your answers to determine how much money you can borrow, and what is the highest price you can afford to pay for a home. However, if you are pre-approved, you have submitted required documentation to your lender to review, and they have run a credit check. This is a more thorough process, and will fully prepare you to find the right home.
Next Month: Touring neighborhoods, seeing homes, and submitting an offer.