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Purchasing a Home...Page 3
The best advice I can give young people just
thinking about this is to keep absolutely perfect credit. Once you get out of college your
credit score is like your SAT was before you got into college. It is the key to
opportunity.
Your income and credit will determine what size loan you can qualify for. You now need the
cash to make it happen. You need cash for 3 things: 1) the actual "down payment"
2) closing costs. This is where a lot of people get misled. You need to cover your one
time or "non-recurring" closing costs, your recurring closing costs: prepaid
interest, insurance, impounds if there is PMI and potential pro-rated property tax 3)
reserves. Your lender does not want to see a loan application the shows that when you
close the deal you will have $5.99 left in the bank. They want to see 2 months PITI in
reserve. Don't try to minimize this. Make sure that you get together all of the cash
necessary to close.
Once you have determined what size loan you will be able to qualify for and where the
money is coming from you and a mortgage broker can determine how expensive a home you can
afford.
If you are planning on seeing Realtors and potentially making an offer it is essential
that you get "preapproved". Using our site,
you can fill out the on-line application, fax us a credit authorization and we can
prequalify you. Then you can walk into a Realtor's office with a letter stating that you
can close a given deal. This will get the attention of the Realtor, it will get the
attention of the seller, and it will mean that you can close quickly. This is very
important for properties for which the seller has multiple offers. I have seen my client's
offers accepted even though they were $3,000 less that other offers because they could
close in 3 weeks. To some sellers time is more important that the extra money. This is
especially true if they are buying another house and need the cash to close their deal.
Ah! Realtors.
Once you get preapproved you should identify where you think you want to live and find a
great Realtor in that area. To me, a great Realtor is someone who is going to listen to
what you want, help you to find out what you want if you don't yet know and then start
looking. If you are relocating the Internet can be a great resource. You can find
demographic information about areas, schools, mortgages and real estate listings.
The process should consist in the Realtor showing you several houses and getting your
feedback and then getting a very clear idea of what you want and finding it. Finding it
may take weeks or months. It's up to you. A good Realtor will not let you buy a house that
is overpriced or that has physical problems that you do not have the experience, ability
or money to deal with.
That's it. Find a mortgage broker, get prequalified, find a Realtor and bounce that ball
off your very own wall!
Mortgage Calculators:
-----------------------
• How much will my payments
be?
• Which is better: fixed or
adjustable?
• Which is better: 15 or 30
year term?
• What will my closing costs
be?
• What will my refinancing
costs be? |
