Homebuyer Do’s and Don’ts
Buying a home can be a stressful experience, especially if you are new to the process.
Need a little help to guide you along the way? Here are some do's and don'ts that can help you avoid common missteps in finding your dream home.
Do review your credit report as soon as you know that you will be buying a home.
Your credit rating is an integral part of the mortgage application process and you want it in the best shape possible.
Reviewing your credit report several months before you begin the mortgage application process can help you identify any errors that need to be corrected or adjust any credit behaviors that need to be adjusted. Small changes that you make now could have a big impact on your interest rate and mortgage payment later.
Do reach out to a lender for a pre-approval on your mortgage as one of the first steps in the home buying process.
Seeking out a pre-approval early can be especially helpful if there is anything that needs to be corrected or improved to help your mortgage application.
Also, having a pre-approval in hand will help you negotiate with a seller.
Do spend as much time looking at your finances as you do comparing kitchen layouts and square footage.
At BCU we have an account that can do just that, it's called the Rainy Day Savings account. Open this separate account to take "you" out of the savings equation and set up an automatic deduction from your paycheck or checking account into this Rainy Day account.
Understanding what your lender approves you for and what you can actually afford are two separate things.
Also, don't forget to include property taxes and insurance in case they're not already included in your monthly payment.
Don't rush through the mortgage application process.
Taking on a mortgage is a big financial commitment, so it's important that you fully understand the different mortgage types available and which one is best for you.
Also, make sure your mortgage contract includes a contingency clause which will protect you should your loan fall through or the home's purchase price exceeds the appraisal.
Don't forgo a home inspection.
Once you've made an offer and it's been accepted, schedule your home inspection. This may cost you a couple hundred dollars, but completing one could help you avoid the inconvenience and cost of moving into a home with serious problems that you weren't aware of.
Don't buy a home in hopes of turning a profit tomorrow.
When you couple today's low interest rate environment and great values in the housing market, you may determine that now is a good time for you to buy. But the housing market can be unpredictable; so make sure that you buy a home because you need one – not because you think you will be able to flip it and make money tomorrow.
And, there you have it. All you need to know about the do's and don'ts of home buying. For more information about home buying and the mortgage process, please visit the Life. Money. You. section on our website, www.bcu.org.