Make a Game Plan
Buying a home is a time of enormous possibilities and intense
preparation. Doing some preliminary planning before you begin your home
search will make the entire process more manageable and less overwhelming.
As part of your initial game plan, you should:
· Fine-tune your credit rating;
· Explore mortgage pre-qualification and pre-approval;
· Become an educated buyer; and
· Make a wish list to learn what you need, want and don't want in a
Check Your Credit Rating
Even if you're sure you have excellent credit, it's wise to
double-check at the outset. Straightening out any errors or disputed items
now will avoid troublesome holdups down the road when you're waiting for
mortgage approval. You may see
disputed items, in addition to errors caused by a faulty social security
number, a name similar to yours, or a court ordered judgment you paid off
that hasn't been cleared from the public records. If such items appear,
write a letter to the appropriate credit bureau. Credit bureaus are required
to help you straighten things out in a reasonable time (usually 30 days).
TIP: Make sure that any outdated derogatory entries are deleted from
your credit file. Adverse credit information is not supposed to be reported
or included on your credit report after seven years (except bankruptcy
information, which can be reported up to ten years).
TIP: Officially cancel inactive credit cards. If you have an inactive
credit card with a $5,000 limit, even though you owe nothing on it, some
mortgage lenders will consider that a potential future debt. Too many
inactive credit cards with significant credit limits could keep you from
obtaining a mortgage loan. Don't just cut up your extra cards; officially
cancel them, and do it now so there will be time for the news to reach the
TIP: Hold off on making any major credit card or car purchases while
you're waiting to apply for a mortgage. Monthly payments you're obligated to
pay will be counted against you, and reduce the amount of the mortgage loan
you'll be offered. Even if you've been pre-approved for a mortgage, that
approval is subject to last-minute evaluation of your financial situation,
and a spending spree for appliances, furniture and other goodies intended
for your new home may wreck your chances for buying it.
Pre-qualification and Pre-approval on a Mortgage
Any reputable real estate broker will "pre-qualify" you for a
mortgage before you start house-hunting. This process includes analyzing
your income, assets and present debt to estimate what you may be able to
afford on a house purchase. Mortgage brokers, or a lender's own mortgage
counselors can also calculate the same sort of informal estimate for you.
Obtaining mortgage "pre-approval" is another thing entirely.
It means that you have in hand a lender's written commitment to put together
a loan for you (subject only to the particular house you want to buy passing
the lender's appraisal).
Pre-approval makes you a strong buyer, welcomed by sellers. With most
other purchasers, sellers must tie the house up on a contract while waiting
to see if the would-be buyer can really obtain financing.
The down side is that you may have to pay application fees to cover the
lender's paperwork in verifying your employment, income, assets, debts and
credit rating. If you later decide not to use that particular lender, you'd
have to start all over again elsewhere - with no rebate.
Pre-approval will also speed up the entire mortgage procedure once
you've found the house you want. The only remaining question will be whether
the house will "appraise" for enough to warrant the loan.
Become an Educated Buyer: Research Neighborhoods, Read Ads and Visit
If you were changing cities, the standard advice used to be to
subscribe to the local newspaper in the new town and start reading local
news and classified ads to get a feeling for different neighborhoods.
For local moves, you have the advantage of driving around neighborhoods
that interest you and looking at lawn signs. Particularly on weekends, you
will see "Open House" postings. Don't hesitate to walk in, even if
you're not ready to buy yet. Visiting open houses is an excellent way to
familiarize yourself with the market and judge various real estate agents
you may meet along the way, and it won't put you under obligation to anyone.
One thing you may want to consider is hiring an agent to work for
you. Not only can they
negotiate on your behalf, but many times it will not cost you a single dime
to hire. Ask Scott or Bill how.
Your Wish List
Making sure you end up with the right home involves figuring out
exactly what features you need, want and don't want in a home. Before
starting your search, you should make a "wish list" to decide
which features are absolutely essential, which are nice "extras"
if you happen to find them, and which are completely undesirable.
The more specific you can be about what you're looking for from the
outset, the more effective your home search will be. Also keep in mind, that
in the end, every home purchase is a compromise.
We hope this helps and would love to hear from you when you are ready.
For more help, contact
Scott or Bill via email or phone. We will be happy to get the information you need, and exceed
I do this as a living. If
you have any questions at any time, feel free to contact me, either via voice,