A new year means new resolutions, and new opportunities in the housing market. Here are 6 ways you can start preparing for a smooth process before searching for your dream home in 2019:
1.Your Credit Score:
Your credit score has a major role in determining how much you will pay for your new home, and can help you get better interest rates. Lenders prefer to work with borrowers who have credit scores in tip top shape as this makes them feel more comfortable and confident that the loan will be repaid without issues. If you are still working on building up your credit score, there are ways to start improving it:
- Paying bills on time can make a big difference. Delaying bill payments can damage your credit score. Schedule bill payments in advance, or pay them on due dates to avoid late fees.
- Building credit is vital, and to do so you have to be active, such as having a credit card you use and pay off on time. This doesn’t mean you need to charge more than you can or should. It is a good method to use for paying bills, groceries, and travel expenses. Take the time to learn more about and how using credit cards can influence both your credit card account and credit score overall.
- Check for errors on your credit report. Mistakes do happen, and if you find one, it can be fixed to get your credit score to what it should be without the error.
2. Working with a Loan Officer:
Knowing what you’re looking for and where you stand financially will help you and your loan officer find the right lender. There are many advantages of working with a mortgage broker early in the process, as they can guide you through the preliminary steps to take before house hunting:
- Decide on a budget range, potential locations, and organize your finances. This will show sellers (and their agents) that you know exactly what you are searching for and that you are a serious buyer.
- Speak to your loan officer about rates and and mortgage programs available that work with your financial circumstances. A mortgage specialist will help you know what all your options are.
- Getting preapproved for your future loan can help you know sooner than later how much your lender will be offering you for your home purchase. Knowing this number in advance is helpful in working with your budget while searching for your new home, and reassures sellers that the sale transaction will work out smoothly. When working on getting preapproved, you will go through most of the paperwork needed early on in the process.
3. Budgeting payments as a homeowner:
A mortgage pre-approval will help you gage how much you will need to set aside monthly for your loan payments, and for other costs involved in being a homeowner, such as: insurance, taxes, general maintenance, and in some cases HOA fees. Outlining a budget helps you project what to expect financially, beyond the cost of the home purchase to avoid any major surprises that can lead to debt.
4. A realistic dream home list:
What do you need for your new home and what do you want after the necessities are checked off? Some of the most common priorities when searching for a home are: What school district you will be in, what amenities are near by, neighborhood safety, and considering the commuting routes from your new home to frequented places.
In terms of what is inside your home, the first necessity is deciding on how many bedrooms and bathrooms you need to be comfortable, and then on the things you really want and value. Do you dream of having a kitchen with plenty of counter space, and a big backyard with a pool and enough space for the kids to play? Many homes you see will have the appeal and match your desires, but being realistic about putting the things you need before the things you want will help you find the right place to call home.
Make a separate list of remodeling goals that can be met in the future if financial circumstances improve your monthly/yearly budget. If a home seems to be in your budget, but requires many repairs from your pocket before moving in, be sure to factor those costs into your financial plan to see if this home still fits within your reach.
5. Finding a Real Estate Agent:
Working with an expert negotiator and experienced house hunter who understands what you’re looking for will be a tremendous help. Your loan officer may have recommendations of real estate agents for you, and this will be a huge plus to work with a mortgage specialist and Realtor who have already have a successful history of working together. Take the time to speak and meet with your real estate agent to discuss your goals and eligibilities as a homeowner and to know what to expect in regards to the agent’s communication preferences (email, text, calls) and if it meets your style, as well. If you speak more than one language and prefer to communicate in one over the other, finding an agent who can speak both English and your native language can help assure compatibility in working together throughout the process.
6. Scheduling showings:
After getting all the prerequisites in order, the time comes for the exciting part that makes it all feel real: Visiting potential homes to call your own! Your real estate agent can now work on scheduling home showings in your price range and in accordance to the preapproval information provided by your loan officer, and meeting if not all, most of your necessities, and including a variety of your wants. Open houses are also a great way of checking out what is on the market. Ask your agent to see what open house events are coming up, or if you heard of them yourselves, let your agent know!