Close with Success by Preparing Before You Go Home Shopping
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1. Check your credit report and score before you call a Realtor
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You’ve clicked through hundreds of online listings, compared floor plans and square footage, and are eager to jump-start your search. But before you even think of setting foot in an open house, make sure you get a copy of your credit report. The cleaner your credit report and the higher your credit score, the more likely you are to be pre-approved for a mortgage at a low interest rate. The optimal score is 720 or higher, but a good Realtor can point you to lenders that will go down to scores as low as 580 and you might have circumstances a lender can look past a low score. Above all don’t make any large credit purchases or apply for any credit cards if you’re think about purchasing a home anytime soon.
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Review your credit report a few months before you begin your house hunting and you’ll have time to ensure the facts are correct. Dispute mistakes before your mortgage lender checks your credit, but have your Realtor set up a one on one private consultation with a mortgage lender to review your credit report and give you a path to success when accessing your report. Sometimes it’s best simply to leave something alone, rather than trying to correct it and a professional mortgage lender can help you avoid making these mistakes. You can access a free copy of your credit report at annualcreditreport.com once every 12 months.
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2. Getting pre-approved and having a strategy
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After you’ve assessed your credit report, it’s time to establish with a lender how much you can afford. Home buyers need to take the time to get a pre-approval from their lender before looking at homes. This includes getting a lender to do a credit check and giving them a copy of W-2′s, pay stubs, and bank statements, as well as discussing your home buying strategy.
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Building wealth through real estate is still possible in today’s market, but the rules have have changed since 2008. Since I’m a bank owned property real estate expert I strongly encourage even first time home buyers consider this great buyer’s market or even older homes in need of updating.
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I know what you’re probably thinking,”how can a first time home buyer possible undertake a project like a bank owned property”, but it’s really a lot easier than you think and smart home buyers are doing it every day with great success. The key is having a great team of professionals only an experience Realtor has. Taking the time up-front to know your options puts you in a better position, so choose your Realtor wisely.
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3. Not creating a long-term budget
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If the housing crisis proved anything, it’s that mortgages were given to people who clearly did not have the means to pay them back. To avoid making this mistake, home buyers should create a budget before beginning their home search to determine just how much house they can really afford. A good rule of thumb is to devote no more than a third or less of your gross monthly household income to housing costs, which include mortgage principal, interest, taxes, and insurance.
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4. Forgetting about the hidden costs
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When you’re renting and the air conditioner goes out, what do you do? You call the landlord. “When you own a house, what do you do? You have to fix it yourself.” You may find there are numerous “nickel and dime” things to account for that could add up to a significant chunk of money over time especially if your purchasing an older home. One way to address this is, especially when purchasing an older home is the FHA 203K renovation loan. Older homes can be purchased for less than a new home, simply because a lot of things might need to be dated. Using the FHA 203K renovation lets you update a home after closing with many things like new appliances, air conditioning, thermal windows and doors and so much most I can list them all, but my experienced FHA 203K lender can.
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5. Not using professional help
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Sure, it’s possible to go out and buy a home without the aid of a professional Realtor, but think about how much time and stress a good Realtor can save you, not to mention minimizing risk by having having a host of professionals to guide your through the process. For starters, Realtors have access to all the homes on the market through the multiple listing service, plus all the ones that are under contract and sold. A Realtor has time to sift through all of these listings and make the appointments to show you the houses, create comparative market analyses to determine proper pricing, and meet with necessary inspectors. Realtors also can help buyers traverse a taxing, mulit page real estate contract. I would want someone who is going to look out for my interests first and foremost. Someone who knows the contracts, who has experience negotiating and who can walk me through the entire process smoothly—step by step.
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6. Picking your agents and lender blindly
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One of the mistakes a lot of people make is finding an agent they aren’t comfortable with. Begin your search by asking relatives, friends, neighbors, and co-workers for referrals and as I always say make sure they have a Realtor designation.
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First-time home buyers, are generally more time-consuming than the average buyer and require more attention. A good Realtor will be friendly and accommodating, show only homes that fit your parameters and help you with strategies during the bidding process—but never pressure you into something you’re not comfortable with. It’s important that the Realtor be experienced with first-time buyers, understand their wants and needs and be able to connect with you. Similarly, you should feel at ease and have complete confidence in their mortgage lender. Both should fully discuss and understand your home buying and financing options. “Don’t apologize for asking questions, I can’t stress the importance of knowing what you’re getting into. There’s a pretty substantial chunk of people who are in really rough straits right now and asking questions can prevent that.
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7. Thinking you’ll get everything on your “wish list”
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Another mistake people make is being too close-minded while searching for their home. I suggests sitting down with your Realtor before searching for a home and creating a need/want list. Some of the items you might want to include as “must haves”, “deal breakers” like an area you’d want to live in, square footage, or accessibility to work, schools, entertainment and shopping. The second part of the list would be things you don’t necessarily need, but wish you had; a garage, new kitchen appliances, or an extra room for an office. Sometimes you find the right neighborhood, but not the right home. That’s where and FHA 203K Renovation loan can come in handy.
203k Home Improvement Loans Part 2 of 2
Maybe you find the wrong home in the right neighborhood, but making it right means a new master bedroom and bath. Often times the best neighborhoods are made up of older homes where updating homes have taking place and as long as the neighborhood supports your wish list you can get the financing to include these improvements with an FHA 203K renovation loan. Here’s something really great thing most Realtors and few home buyers don’t know; you can include up to six month of mortgage payments when using the FHA 203K Renovation loan, so you don’t have to pay rent and a mortgage while your remodeling your new home. Of course it’s getting a little complicated to discuss here, but like I said ask questions of your Realtor and lender. A knowledgeable FHA 203K mortgage lender can help you and your Realtor to crunch all these numbers to make sure you’re offer to the seller makes sense and you aren’t gettng over your head.
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As you search for your home, you may realize there are certain parameters you really want or don’t want. Understand that a certain amount of flexibility is essential. Your aim is to be able to afford everything you need—as well as some items you want—all while staying within a long-term budget. That’s another reason why I think the FHA 203K renovation loans are great when looking at foreclosure, distressed or even older homes. Since you can finance all the improvements at 100% at today historical low interest rate at around 4%, it just makes good sense rather than financing them on high interest rate credit cards or even second mortgage.
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8. Not keeping your feelings in check before hiring a home inspector
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You’ve already chosen the perfect paint color to match your living room set. But hold on: Before you start picking out accent pillows for your sofa, you need to bring in a home inspector to check the safety of your potential new home. Inspectors will evaluate the structure, construction, and mechanical systems of the home and will give you the approximate price of repairs that may be needed. They will examine everything from the electrical system, water heater, and HVAC system, to the foundation and roof.
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A good Realtor will give you a list of inspectors or you can use on line services like Angies List. One thing I always advise my home buyers is to get reference for work done several years back. The reason is quite simple, you want to see how an inspectors or contractors work held up over time! When you make your offer, make sure the seller is aware that your offer is contingent on the house passing inspection or has provisions for an acceptable maximum dollars amount for estimated repairs your willing to work with and can be including in an FHA 203K Renovation Loan.
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9. Not researching your neighborhood
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You may be living in your dream home, but your neighborhood’s a nightmare. Or you may have children or are planning to have children in the near future, but you didn’t consider the quality of the school districts or parks in the vicinity. You should ask yourself a number of questions during your home search, such as “are there good schools nearby and do I feel safe coming home at night?” Take some time to visit a neigbhorhood you’re interested in several different time during the week. What looks good at 10 AM might not be that nice at 9 PM.
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I suggests that if schools are an important factor, you should go check them out personally. Speak with the parents waiting on the steps outside to pick up their kids. Today’s buyers can also gather all sorts of neighborhood information from real estate blogs and websites like Zillow and Trulia. In my opinion its the responsibility of the Realtor to tell you things like this, but ultimately it your home, so independantly check crime reports, school options, churches and shopping. You can change your house, but you can’t change the neighborhood.”
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10. Not considering the resale value of your home
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You’ve just started the home-buying process. The prospect of selling a home hasn’t even crossed your mind. Besides, you’re thinking you might live in whatever home you buy forever. Yet life is full of surprises, whether it is a job transfer, having another child or taking care of an incapacitated relative.
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When the time comes to put your house on the market, will your home be easy or difficult to sell? While you’re on the hunt, it’s a good idea to account for preferences of the typical home buyer. Just because you love to landscape or enjoy a bright-pink backsplash doesn’t mean your future prospective buyer will. How we make our plans initially has a big impact on our ability to adjust those plans and to deal with whatever comes our way, so keep the future in mind with the present.r
April Gongora, Your Realtor for Life
GARDNER REALTORS
4509 Veterans Blvd. Ste.200
Metairie, LA 70006
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