So the time has come. You feel that you’re ready to become a homeowner. Buying a house can be one of the most exciting events in your life. Just imagine. No more listening to that leaky faucet because your landlord won’t fix it. No more worrying about where you’ll live next. You’ll be in one place for maybe the rest of your life. In short, you’ll soon be enjoying that American dream of owning your own house.
But not so fast there.
There are some things that you need to do before you begin house shopping to make sure that the experience will be as easy and as positive as possible.
Gather up all your financial stuff
It would be a mistake to start shopping without first getting your financial ducks in a line. This means that you need to get your credit report from the three credit bureaus – Equifax, Experian and TransUnion – and go through them with a fine tooth comb. The Federal Trade Commission released a report last year that nearly 20% of us have errors in our credit reports and yours could be one of them. Look carefully for mistakes that could be dragging down your credit score. Did you really miss that payment? Do you not remember having done business with that particular lender? If you spot things you don’t believe should be on your credit report you need to dispute them. You do this by writing a letter to the credit bureau along with whatever documentation you have to back up your claim. If you can get an error off your credit report it could help your credit score significantly.
Next, gather up the financial information you’ll need to apply for a mortgage. This typically includes your previous years’ tax returns, pay stubs and bank statements. The goal here is to be able to show a loan officer that you have the ability to make the requisite payments on your mortgage.
Be a mortgage detective
Now that you have your financials in hand it’s time to go online and start researching options for your mortgage. There are a number of online aids available that allow you to comparison shop a number of different lenders in all 50 states. These range from small, local or regional providers to bigger, better known brands such as Bank of America and Citi. Two of the most popular of these tools can be found at TimeValue.com. Quicken Loans and Lending Tree also offers mortgage comparison tools. Be sure to to see if you would qualify for a special loan such as a Veterans Affairs (VA) loan or any other special financing options through a state or federal program.
Once you’ve chosen your mortgage lender be sure to get a preapproval letter as this will make you a more competitive buyer.
Check out neighborhoods
Here comes the fun part, which is choosing your neighborhood. You will want to investigate everything from schools to commute times and criminal activity. The website Trulia.com has maps that will show you the incidence of crimes by neighborhood, the location of schools, commute times and even neighborhoods’ affordability. If it turns out you can’t find anything you can afford in the neighborhood of your choice, check out those that border it for more options.
Make a checklist
The more house shopping you do the tougher it will be to keep your priorities straight and to remember what you’ve seen. In fact, as you see more homes you can actually lose track of what matters.
For example, you might remember that one house had a wonderful kitchen but you can’t remember exactly which one. Or you do remember a house you loved but you think it was listed at $50,000 more than you can afford.
This is where you really need to have a checklist. Probably the easiest way to do this is with a spreadsheet. Use the left-hand column to list the things that you really must have. This could include number of bedrooms, number of bathrooms, type of garage, a well-lit kitchen, proximity to schools, ample storage space and so forth. Following this you could have a list of your “dream” features like granite countertops, upgraded appliances, a patio, a water feature, a three car and so on.
Use the right-hand columns of your spreadsheet for the addresses of houses as you visit them. When you go through each one check off your “must haves” and your “dream” features. This will not only help you keep straight as to the houses you saw but will also help your real estate agent navigate through the home buying process faster and with less confusion. But don’t let your checklist straitjacket you. There’s an old saying in the real estate business that “buyers are liars.” What this means, as any real estate agent will tell you, is that many buyers often tell them one thing but then buy something entirely different. You could end up falling in love with a house that has few of your “must haves” but is outstanding in some other ways. You’ll be living in that house for many, many years so it’s important that you love it – even if it doesn’t have a well-lit kitchen.
Find the right real estate agent
There are real estate agents that are true stars in the business and can work miracles. Unfortunately, there are also some that are less than stellar. All it takes to get a real estate license in most states is pass a background check, take a course in real estate and then pass a written exam. Unfortunately, the sad truth is the skills that are required to pass a written test don’t necessarily correlate to what it takes to be a great real estate agent. Look for an online directory of real estate agents in your area with profiles, ratings and reviews. This should give you a better sense of the agent’s specialties and qualifications. You could also ask friends and family members for recommendations. And be sure to ask any prospective real estate agent for her or his references.
As the following video emphasizes, you need to choose an agent that specializes in the type of home that you want to buy and the neighborhood you’ve chosen. And watch this video for more tips on how to choose the right real estate agent.