Build a house and you start with the foundations. Seems pretty obvious,
doesnt it? But buy a house and too many people focus just on what they see
above ground, forgetting that its as necessary to lay good, solid foundations
for buying a house as it is for building it. Perhaps, as a prospective
homebuyer, you see great interest rates and a buoyant housing market, and youre
not convinced of the need for thorough preparation. You could find, though, that
you dont get to buy your dream home, but instead pay the price for not being
prepared by losing out to someone who has done the necessary legal and financial
spadework.
“The business of America”, declared Calvin Coolidge, “is business”, and you
should make it your business to recognise that buying a home is the biggest
business transaction youre likely to make during your lifetime. So, use your
head before you lose your heart (and perhaps your money) to that dream home.
Complete the preparatory steps before beginning to look at specific homes. Its
only common sense: foundation stone first and keystone last. Well, lets get
down to basics. Lets see how best to start laying that foundation stone to
ensure that you stand the best chance of actually buying the house of your
dreams.
One of the most important preparatory steps you need to take is to initiate
the loan application process. This will entail a lender running a credit check
and drawing up a credit report for a modest fee of $25. You will also need to
complete a loan application. All being well, the lender will furnish you with a
“good faith estimate” showing the costs of the loan and the approximate monthly
repayments. Pre-approval will follow pre-qualification subject to verification
of the information you provide.
So why then, is pre-qualification so important?
1.The process involves a credit report. This might highlight the need to
settle outstanding debts in order to maximize your credit score. Settling any
debts, however, doesnt automatically erase them from your report - it might
take months. You might perhaps need the services of a mortgage consultant to get
you qualified for a loan. Whatever the problems you may experience with your
credit report, the very fact that you will have picked them up early will save
you disappointment later.
2.If all goes well and you get prompt pre-approval, youll be able to put in
an immediate offer when you find your dream home. Pre-approval stands you in
good stead to have a reasonable offer accepted. Its true that bidding wars have
taken place in the northeast U.S, but it still generally holds that
pre-qualification gives you leverage over sellers impressed by your pre-emptive
action.
3.Pre-qualification will help focus your home search. Knowing how much you
can afford will be very useful when searching property websites.
So, make sure your finances are in order. Make sure too, that you have a
realtor working for you and dont rely on the sellers agent. Word of mouth and
personal recommendation are the best way to secure the services of a realtor you
can trust, and who will act in your best interests.
Finally, having advocated a proactive approach throughout, there is one area
over which you have no control and that is the appraisal. Mortgage lenders like
to have an appraisal of your prospective homes market value to protect their
financial interests. You might imagine that your interests too, are being
protected – surely an appraisal will reveal any real problems? - but youd be
wrong. You might pay for the appraisal but you would be well advised to pay for
a home inspection report as well.
Why the extra expense?
1.The inspector is independent of the lender.
2. The inspection will be thorough taking in inspection of the roof; testing
of electrical appliances; checking plumbing and heating and looking for signs of
pest infestation and dry rot.
3.Having had the forethought to get a home inspection report you will now
have the leverage to defer payment of the appraisal fee should you be
dissatisfied with the proposed handling of repairs.
One final word of caution. You should apply the same precautionary principles
to the home itself as you did to the homebuying process. Again, dont let your
heart rule your head. Your dream home might require as much hard work – the
addition or removal of features, for example – as did laying the foundations
earlier in the process.
Maureen Cook lays the foundations for buying Real Estate. Learn how you can
navigate the practical and financial minefields to own your dream home! Visit:
http://www.real-estate.myknowledgevault.com
