The homebuying process is fraught with challenges, and rarely does it go off without a hitch. But you can avoid some common hiccups with a bit of preparation.
Start off your homebuying journey by familiarizing yourself with the market. Figure out where you want to live; close to work, for example, or out in the ‘burbs. Or, in a neighborhood where owners can do as they please with their properties as opposed to a larger, master-planned community stocked with numerous amenities but governed by overzealous owners’ associations.
By knowing where you hope to buy, you can focus on houses – not just resale homes but also new construction – in that area as opposed to frantically running all over the map.
Even if you’re not ready to buy right away, get a feel for market conditions by taking a look at what’s for sale and how long houses remain on the market before being taken off the board. By understanding how fast – or how slowly – sales are occurring, you’ll know whether you will need to make your first offer your best one or you might have some wiggle room to negotiate.
Next, obtain copies of your credit report from the three national credit repositories – Equifax, TransUnion and Experian – and review for any possible errors. Consumers find mistakes in their files all the time – accounts that belong to someone with a name similar to yours, for example, or closed accounts still listed as open. It can takes weeks or even months to correct those blunders, so start early.
Your credit history is extremely important because they are the basis for your all-important credit score. Lenders now swear by these snapshots in time of how you use and maintain credit. Indeed, they are often the basis for approving your application or turning it down.
Once a year, you are entitled to free copies of these reports. And because of COVID-19, the repositories are offering free weekly online reports through April 2021. Go to www.annualcreditreport.com or call 1-877-322-8228. You will need to provide your name, address, social security number, and date of birth to verify your identity.
It’s also never too early to line up the professionals you’ll need along the way – a real estate agent, lender, independent home inspector and possibly even an attorney.
When choosing an agent, look for one who concentrates in the area where you want to move as opposed to an agent who works anywhere and everywhere. That agent will have the most in-depth knowledge about the area to help you with your decision. Second, look for an agent with a great roster of sales. That person may be busy, but he or she is also getting deals done. In addition, if the agent has a team working behind him, he or she can concentrate on what they do best – buying and selling.
Also, consider using a buyer-broker, who is an agent who works only on behalf of buyers and never for sellers. Too many agents say they are buyer-brokers but work both sides of the transaction, depending on their need, not yours. Buyer-brokers, on the other hand, never take a listing because they say it takes a certain mindset to represent buyers and buyers alone, a mindset they believe can’t be switched on and off at whim.
Most people looking for financing consider only the interest rate. But there’s more to financing than that. Service also is important, and with many lenders offering roughly the same rates, it has become key. That’s where your agent’s recommendation comes in.
Agents know which lenders get to the closing table on time without any problems and which ones are habitually late or tend to ask for more last-minute paperwork. So, give their preferred lenders a look, too. And while you’re at it, consider working with a mortgage broker who deals with multiple lenders and can search the market on your behalf.
Once you settle on a lender, apply to be pre-approved. Not pre-qualified, but pre-approved.
Pre-qualified means that based on what you tell the lender verbally or with minimal documentation, you look okay on paper. But you are still subject to full underwriting. Being pre-approved means that you’ve already gone through the underwriting process and are approved for financing up to a certain amount.
Being pre-approved is important for two reasons: One, it tells you in what price range you should be shopping, and two, it tells the seller that financing will not be an issue. Nowadays, some sellers won’t even entertain offers from would-be buyers who are not pre-approved for funding.
Even if you are buying a newly constructed home, lining up a home inspector early in the process is also important. These professionals will go over the house you intend to buy from stem to stern, making sure all the necessary systems are in working order and in decent shape; that doors and windows open and close properly, and that the roof is safe and secure.
They’ll also note any imperfections, but don’t sweat those details; otherwise, you could lose the property. Worry about the big things and bargain around them. Take care of the little things after you move in.
At the current pace of home sales, these professionals are busier than they’ve ever been. So find one you like, make a call and arrange for him or her to be available when you need it. I know of one recent buyer who latched on to an inspector he considered the best in his area and agreed to pay twice his fee so he would drop his other assignments and check out his house right away.
Make these preparations, and you’ll be ready for an easier homebuying experience. There are likely to be some waves as you proceed; there usually are. But, preparation can mean the difference between gentle swells and unexpected rogues. Happy house hunting!
