First Things You Should Do When Buying A House
Question:
“What are the first things I should do if I want to buy a house?” - Lilly, Vero Beach, FL
Answer:
Buying your first home is a huge step and can be both very exciting and intimidating at the same time. There are many rewards to home ownership, such as increased stability and net worth along with pride of ownership, etc., but home ownership also comes with increased responsibilities such as less flexibility to relocate and having to pay for repairs, maintenance and replacements when things break or wear out.
The process for buying a home can also be a bit overwhelming, especially for first time home buyers who have never been through it before. I’ve always found that the best way to tackle big challenges is to break them down into smaller, more manageable pieces, so below are my recommendations for 5 things you should do first in preparing for your first home purchase:
Real Estate Agent
Your very first step should be to find a real estate agent, someone who can share with you their knowledge, experience and understanding of the process. In addition to their knowledge of local communities, property values and market trends, most agents have helped guide many buyers just like you through the maze of paperwork, documentation requirements and processes related to getting approved and prepared to buy your first home.
Credit Reports
Unless you’re paying cash for your new home, you’ll need to be approved for a loan from a lender. The first thing the lender will do is check your current income status and credit history. Pulling your credit reports in advance of applying for a loan gives you an opportunity to address any potential issues or inaccuracies that might be reflected on your reports. You can receive a free copy of your credit reports once each year at www.freecreditreport.com.
Documents
There are several documents you will need to have available to provide to your lender. While each lender has their own specific requirements, here is a list of the most common ones:
Copy of your Birth Certificate
Copy of your Passport
Copy of your State issued Driver’s License or ID
Copies of your previous two years of State and Federal Income Tax Returns
Copies of your previous three months bank statements.
Copies of your previous thirty days of paycheck stubs
Depending on the specifics of your situation or what government or lender programs you may be eligible for, additional documents may be required. If there any abnormalities or unusual activities in your bank accounts, such as a large deposit from your parents who are helping you with the down payment on your home, be prepared to provide a signed letter of explanation detailing where the money came from and its purpose.
Apply For Your Loan
There are a staggering number of lenders in the marketplace today and many of them have a variety of programs available for a broad range of buyers that include first time home buyers, active military personnel and many others. This is also an area where your real estate agent can help you by recommending lenders they have previously worked with. Another option is to apply with a lender with which you already have a current or previous relationship, such as a car loan. And be sure to get Pre-Approved, not just Pre-Qualified. Being Pre-Approved is a much stronger indication of your ability to secure a loan compared to only being Pre-Qualified. Additionally, many sellers will not accept or even consider your offer to purchase their house unless you have been Pre-Approved by your lender.
So, you’ve hired a real estate agent and you’re Pre-Approved, so it’s time to go house shopping, right? The answer is resounding YES! But WAIT just one second because there is one more very important thing you must remember NOT to do during this crucial period:
DO NOT…
Change your employment
Change your residence
Make any large purchases like buying a car or using your credit card to pay for airline tickets. If it’s an emergency, notify your real estate agent and your lender as quickly as possible.
Open, Payoff or Close any credit accounts
Any changes in your income, credit status or the basis of the information used by the lender in determining your loan qualifications can result in the lender withdrawing their approval or require you to start the entire process all over again. So, unless it’s an absolute necessity, just say no and wait until after you have closed on your new house. If in doubt, talk to your agent or your lender direct and they can help inform you as to any possible consequences.
For more information on selling your house, buying your new home or investing in Central Florida’s amazing real estate market, please contact me - Brian Hayes, Realtor®