Lisa Oleksak-Sullivan's Blog
Buying a home should be an unforgettable journey, one that enables you to purchase a high-quality house at a budget-friendly price. If you start planning for the homebuying journey today, you may be able to reduce the risk of encountering homebuying hurdles as you attempt to acquire a first-rate house.
Ultimately, there are many important decisions for homebuyers to make before they enter the real estate market, including:
1. Where Do I Want to Live?
As a homebuyer, you'll want to know where you want to go so you can map out your property buying journey.
Consider your current and future plans before you enter the housing market – you'll be glad you did. This will enable you to consider where you'll be in the next few months and years and plan accordingly.
For example, if you currently work in the city and intend to stay at your present job, you may want to search for a home that makes it easy to commute to work.
On the other hand, if you plan to start a family in the foreseeable future, you may want to consider purchasing a home near various top-notch parks and schools.
2. How Much Can I Spend on a House?
You know that you'd like to become a homeowner, but how much can you afford to pay for a residence? Meet with several banks and credit unions, and you can start budgeting for a home.
Banks and credit unions can help you get pre-approved for a mortgage. Then, with a mortgage in hand, you can enter the real estate market with a good idea about how much you can spend on a residence.
Many banks and credit unions are available, and they are happy to teach you about the ins and outs of numerous mortgage options. Plus, lenders will respond to your mortgage concerns and queries and help you make an informed mortgage decision.
3. Will I Need to Hire a Real Estate Agent?
If you're on the lookout for your dream home, why not hire an expert to guide you along the homebuying journey? With a real estate agent at your side, you can take the guesswork out of finding and purchasing your ideal residence.
A real estate agent will provide expert support at each stage of the homebuying journey. As such, he or she will help you set realistic expectations before you begin your search for your dream house.
Perhaps best of all, a real estate agent will set up home showings, keep you informed about new properties as they become available and negotiate with home sellers on your behalf. This housing market professional will even offer expert real estate insights that you might struggle to obtain elsewhere.
When it comes to purchasing a house, there is no need to leave anything to chance. Fortunately, you can hire a real estate agent to help you along the homebuying journey and simplify the process of going from homebuyer to homeowner.
Your credit score is one of the most important numbers to your financial picture. You know how important it is to have a high credit score. If you pay your bills on time and keep your debt down, you think that your score will be just fine, but this isn’t always the case. There are a few hidden mistakes that you could be making that are bringing your credit score down. Read on to find out what to avoid when trying to keep your credit score up and maintain it.
Too Many Credit Inquiries
Beware that every time you apply for a new loan or even just check on what type of interest rate you can get, your credit will be reviewed. You want to avoid too many credit inquiries because a high number will bring your credit score down. Always ask if a lender is pulling a hard inquiry to check your score, don’t allow too many of these credit checks.
Anything Small Can Make A Big Impact
Was there a mistake on a medical bill that you paid but it says it was unpaid? If you let this go, your credit score could be impacted. Even unreturned library books that have been turned over to collections can negatively affect your score. Stay on top of things because you never know how a small mishap can affect you.
Your Information Is Wrong
You should look at your credit report so that you can see more than just your history. You can see the information that is being reported to check for mistakes. Incorrect information can bring your credit score down. You can call the credit bureau that’s associated with any errors that you see on your credit report. It can be a little bit of a process to correct the mistakes on your credit report, but the time and effort is definitely worth it for your credit score.
Not Using your Credit
While using your credit too much is a problem, not making use of your credit at all can be a problem. Responsibly use your credit. Open a credit card and use it to make small purchases. Charge only things that you can afford and pay the balance off each month. This simple use of a card is one of the easiest ways to establish credit.
It’s important to do what you can to develop and maintain a healthy credit score. Keep all of your avenues covered to be sure that nothing hidden can negatively affect your credit score.
Getting a home inspection is usually built into the purchase contract for most real estate transactions. A home inspection contingency protects the buyer from getting any unwelcome surprises after they buy the home (think water damage or an HVAC system whose days are numbered).
In some cases, home inspections are the defining moment between a sale or moving on to other options.
In today’s post, we’re going to talk about the reasons you might want to get a home inspection whether you’re buying or selling a home.
Home inspections for buyers
There’s a reason most real estate contracts come with an inspection contingency. Expensive, impending repairs on a home can greatly affect how much you’re willing to offer on a home, or if you’re willing to make an offer at all.
Some buyers opt out of an inspection. This can be done for numerous reasons. The most common reason is that the buyer has a personal relationship with the seller and has faith that they are getting the full story when it comes to the state of the house. The other reason is that a buyer is trying to gain a competitive edge over the competition on a home, sweetening the deal by waiving the inspection and paving the way for a quick sale.
Both of these reasons have their flaws. For one, the seller might not even know the full extent of the repairs a home may need and an appraisal might not catch all of the issues with a home.
Another reason a buyer may waive an inspection contingency is because the seller claims to have recently had the home inspected. While this may be true, buyers should still opt to hire their own professional. This way, they can guarantee that the inspection was done by someone who is licensed and has their best interests in mind.
Home inspections for sellers
As we’ve seen, home inspections are typically designed to protect the interest of home buyers. However, sellers also stand to gain from ordering their own home inspection.
If you’re planning on selling within the next six months to a year, it will pay off to know exactly what issues the home currently has or will have in the near future. This will give you the chance to make repairs or address issues that could cause complications with your sale. You don’t want to be on your way to closing on an offer to suddenly realize you need to pay and arrange for a new roof.
So, whether you’re a buyer or seller, home inspections can be immensely beneficial to learn more about your home or the home you’re planning on buying. It will help you be prepared to make repairs if you’re a buyer. Or, if you’re a seller, you can make a plan to negotiate repairs with the seller based on the findings of the inspection.
If you’re a first-time buyer, odds are you’ve never seen or heard much about mortgage applications. However, for something as important as buying a home, it pays off to go into the process knowing what to expect.
Mortgage applications aren’t all that complicated in and of themselves. Most of the time, your chosen lender will walk you through the process and answer any questions that arise. However, complications do arise when it comes time to provide documentation on things like your income.
To make things easier for your first application, I’ve put together this list of frequently asked questions that first-time buyers often have about their mortgage application process.
Will applying for a mortgage hurt my credit score?
Mortgage lenders will run a credit inquiry to help determine your lending eligibility. There are two types of credit inquiries: hard and soft. A soft inquiry is a quick credit check that doesn’t affect your credit score. A hard inquiry, on the other hand, does. This means your score will be lowered slightly for a few months and then will bounce back.
Mortgage lenders run both types of inquiries. For quick, pre-qualifications, lenders typically run a soft inquiry. Then, as you progress through the approval process, they’re run a detailed credit report (hard inquiry).
What information should I have available?
Lenders will ask you for various documents. The most common things they will ask for include proof of income in the form of W-2 forms from the previous year and your most recent pay stub. They will also require a record of your other debts, including student loans, auto loans, credit card debt, and any other outstanding debt that you owe. Finally, they will ask for an inventory of your assets. This could include investments, properties, auto titles, and more.
What if I don’t work a conventional job?
People who are self-employed or have unconventional income can still qualify for a loan and will still be required to show proof of income. Lenders may ask for Form 1099 records, tax returns, or any other record or proof of income you have available.
How long does it take to complete an application?
Mortgage applications can be completed as quickly as you gather the required documentation. However, there’s more to getting approved for a mortgage than filling out an application. There will be time needed to process the application, and underwrite your mortgage. This entire process typically takes between 30 and 45 days.
Is it safe to apply for a mortgage online?
Most lenders allow you to start the application process online and their online portals are typically secure. Make sure you check your browser window to ensure that the connection to the site is secured, and you should have nothing to worry about.
Keep in mind that most online applications are designed to get you prequalified and on your way to getting a mortgage. So, if you want to avoid getting calls from the lender, you might not want to enter any data until you know you’re interested in borrowing at this time.
Let's face it – the homebuying journey may prove to be an expensive experience. If you're not careful, you risk overspending to acquire your dream house. On the other hand, if you purchase a home without identifying underlying structural problems, you risk costly home repairs down the line.
Ultimately, it helps to establish a budget for the homebuying journey. If you have a budget in place, you can increase the likelihood of having the necessary funds on hand to overcome many potential homebuying hurdles.
You should have no trouble creating a homebuying budget, either. In fact, here are three tips to help you put together a budget for the homebuying journey.
1. Assess Your Financial Situation
If you intend to purchase a house in the foreseeable future, you'll want to take a close look at your finances. By doing so, you may be able to reduce your monthly spending and use your savings to accelerate the homebuying journey.
It often helps to assess your daily, weekly and monthly expenses. Then, you may discover bills that you can cut from your everyday budget.
For example, you may enjoy dining out regularly, but cooking at home may prove to be more cost-effective. And as you reduce your dining expenses, you can save money that you can use toward the down payment on a new house.
2. Obtain Your Credit Score
Believe it or not, your credit score can make a world of difference in your quest to acquire a house. If you check your credit score, you may be able to find ways to improve your credit score prior to kicking off a house search.
You are eligible to receive a free copy of your credit report from each of the three reporting bureaus (Experian, Equifax and TransUnion). Take advantage of this perk, and you can learn your credit score in no time at all.
Remember, your credit score may have a major impact on your ability to land a favorable mortgage. And if you find that you have a below-average credit score, you then can pay off outstanding debt to improve it before you start your search for a new home.
3. Get Pre-Approved for a Mortgage
Pre-approval for a mortgage is ideal. With a mortgage in hand, you can enter the real estate market with a budget for buying a house.
To get pre-approved for a mortgage, you should meet with banks and credit unions. These financial institutions can offer insights into a variety of mortgage options and help you make an informed mortgage selection.
Lastly, as you prepare a homebuying budget, you may want to collaborate with a real estate agent. This housing market professional can help you hone your home search to residences that fall within your price range. Perhaps best of all, a real estate agent will make it simple for you to avoid spending too much to acquire your dream house.
Get ready to buy a house – use the aforementioned tips, and you can establish a successful homebuying budget.