So you think you might be buying a house soon? You’re in the right place because my Buying a House Checklist will help you get prepared for that big purchase.
You can check your credit without contacting a lender using resources like freecreditreport.com, which is a great resource. The reason I recommend speaking with a lender is because they can give you action items to do that will save you TONS of money in the long run.
For example, lenders extend credit at a certain interest rate in tiers based on your credit score. So, if your credit is 679 for example, you may qualify for one rate, but at 680 it might be another rate. I’m totally just pulling these numbers out of the air, these are not real numbers, they are just for demonstrating the idea.
A good lender can give you a checklist of things you can do to make your credit score better. And this does not just apply to people with bad credit. Even if you have fantastic credit, there are probably things you could do that could save you money on your loan.
For example, when I was looking for loans to refinance my home, I had a credit card with a zero balance. My lender told me to go make a purchase of $10 on that card. So my husband went and bought a new pair of funky socks. He really likes funky socks. It changed our payment by $20/month. That might not sound like much, but $20/month is $240 per year of savings or $86,400 over the life of a 30 year loan, just for buying some funky socks! Speaking to a good lender can tell you exactly what steps to take to get the best rate. These things usually take at least one billing cycle to take effect, or more if you need a few months worth of cash flow to implement the plan, so it’s best to get working on it quickly.
Pretty much all lenders will have access to the same types of loans. The biggest difference is in the fees they charge. You can’t look only at the rate and know if you are getting a good deal or not. There is a standardized document called the Loan Estimate Form that all lenders can give you so you can make sure you are comparing apples to apples when looking at all the different rates and the different fees.
How much you want to spend doesn’t always correlate with how much you are approved for. Sometimes those pre-approvals can be WAY more than you would be comfortable spending for a mortgage payment every month. There are several great mortgage affordability calculators online that will be very helpful in setting your new home budget. They allow you to enter your current debts, income, credit score and what price range you should be looking in and how much your mortgage payment will be.
Buying a home comes with lots of expenses. In addition to the cost of the house. You’ll need a downpayment, which will range from 3.5 - 20% down. (Your lender can give you much more specific information) You’ll need money for inspections. In North Carolina, I recommend doing a minimum of a general home inspection, pest inspection and radon inspection. Those will run somewhere between $650 and $700. You’ll also need an appraisal, about $500 and a survey, another $500 or so. And you always want to have a little extra cash in case you need an extra inspection such as a roofing inspection, HVAC inspection or a structural inspection.
Once you have identified which lender you want to work with, and you have saved up enough money for your purchase expenses, you can get your preapproval. The preapproval is usually good for 60-90 days. But make sure not to make any major purchases or other significant financial changes once you are approved and in the purchase process. Even a large deposit into your bank account will trigger questions from loan underwriters and you’ll have to show documentation of where the money came from, which can affect your approval.
Finding a good fit Realtor can take some effort. There are many excellent agents out there. The most important thing when looking for an agent is finding someone you are comfortable talking to, and who you trust to answer your questions accurately and honestly.
Once you establish a relationship with an agent, they can help guide you through the rest of the process, finding where you want to live and choosing the perfect home for you!
The Triangle is a large area with all kinds of resources and amenities and lifestyles. Do you want to be downtown? Or do you prefer the small town feel. Do you want to be close to restaurants or parks? How do you spend your free time and what types of amenities are most important for you to live near? The answers to these questions will help you narrow down which towns and neighborhoods you should be looking at. If you are new to the area, your Realtor should be able to guide you through this process to make sure you land in the right place.
You can research areas in the Triangle on my local blogs here: Which Triangle Town Should I Move to?
Decide what things are most important to you in a home. When I say “must have’s” I mean things that you absolutely will not purchase the home without. This will form the foundation of your search. Consciously identifying those things that are non-negotiable will really help you when you fall in love with a property that has one of your wants but not one of your needs.
When listing agents stage a home for sale, that staging can really make a buyer develop an emotional connection to the home. But that doesn’t mean the home is always a good fit. Know your needs to avoid choosing the wrong house.
Now that you know what you want, you’ve got the money to buy it and you’ve got professionals to help you through the process, it’s time to go shopping! Contact your agent with the list of homes you want to see and she will get you started on your search! Good luck!
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Ellen is the founder of Harmony Realty, a socially conscious realty company. Ellen believes in empowering her clients through education and open communication. Ellen is a number-cruncher at heart and takes great pleasure in following and analyzing the trends of the housing industry. She loves communicating the big picture to her clients and helping them to understand how the market affects their sale or purchase. Her honest and down-to-earth approach allows her clients to make informed and intelligent decisions to get the most out of their offers and negotiations.