If you are interested in purchasing a home at some point in 2012, do not wait until the new year to start on the process. With housing prices down and mortgage rates at record lows, there are going to be a lot of buyers looking to purchase a home as well. Get a jump on starting the process by following these 4 tips.
1. Check your credit
There is nothing worse than finding your dream home and then finding out you do not have the credit to purchase it. Before you begin your search for a new home, take the time to talk to a qualified lender regarding pre-approval , or better yet, full approval. The information a mortgage lender will provide is essential in finding out not what you think you can afford, but what a bank is willing to lend you to make your dream home a reality.
If you have any credit issues, you should start on repairing the damage to help reduce your eventual loan rate so you can get the best deal possible.
Here is an example: A top-level FICO score of 760-850 could earn you an interest rate of 3.039% on a 30-year fixed-rate mortgage while a score of 660 to 670 would likely get you a rate of 3.652% and a score of 620 to 639 would likely get you a rate of 4.628%.
These numbers may not seem all that far apart but over 10, 20, or 30 years, the difference really adds up.
2. Do your research
Why wait until the new year to start your search? You can find out a lot of information on the market as well as individual house right from your computer
· Target neighborhoods
December is a great time to start your online research into decision-driving factors like tax rates, school districts, neighborhood character and even prices in various areas. Talk to an agent regarding your preferences for recommendations on which areas might be best based on what you are looking for.
· Short sales and Foreclosures
Distressed property sales are not for the unwary. If you want to target upside down or foreclosed homes, or are planning to house hunt in an area where many of the listings are described as short sales or foreclosures, get educated about what you can expect from a distressed property purchase transaction before you get your heart set on a short sale.
· Mortgage Info
You can read a bunch of articles about mortgages and get yourself pretty far down the path toward qualifying for a home loan, but you can only get a personalized action plan for a smooth road ‘home’ by talking with a local mortgage broker and having them assess your basic financials. They might say you need to move funds around, pay a bill down or off or produce some sort of documentation from your employer. And the time to start all that is now. If you are in need of some recommendations, I am able to provide them upon request.
3. While Saving Your Down Payment and Closing Costs, Save A Bit Extra
As you save up your down payment, try really hard to save a bit extra for unexpected expenses once you own your own home. If there’s one thing you take away from this blog, please go into homeownership with the understanding that unexpected expenses will come up. No matter what you do, these things happen. Why not prepare a bit while saving your down payment? My advice: Try to save at least an extra 5-10% for these unexpected expenses. Let’s say you save up $50,000 for your down payment. 5-10% of $50,000 is $2,500-$5,000 extra saved away for the unexpected. Important
The unexpected expenses will continue to crop up. Make sure to save a little extra money each month once you are a homeowner, knowing that those savings will be used towards these unexpected expenses in the future. As you budget for the type of home you can afford, make sure to buy within your limits so you’re able to save money while paying your monthly mortgage bill.
4. Sell Your Unwanted Stuff
Every holiday season, I notice how much stuff (junk) I have accumulated over the last year. Things that I no longer need (most of the junk stuff in my basement), things I no longer use (old printer, CRT monitor), and things I no longer wear all take up space. Instead of planning on packing all of this, why not get rid of it now instead of bringing it along to your new home.
If you can sell it, sell it. If not, donate it. There are many places around St. Louis that accept donations from televisions to books and video games to clothes and I am sure they would be happy to have it. Over the past month, I have sold 4 items on Craigslist including an old stereo, a wireless router, a work out matt, and a Charter modem as well as donated all of the clothes I have not worn in the last year to Goodwill. The benefits of removing your clutter include getting some cold hard cash to go toward your savings, getting some tax receipts so you can deduct the value of your donations in January, and minimizing money spent on holiday gifts, and clearing the physical clutter in your preparation for your eventual move.