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| Buying a Home Requires Planning Ahead |
| By Charles Essmeier |
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Buying a house has become astonishingly expensive during the past five years. In fact, the median price of a home in the United States is now in the range of $225,000. With a 30 year mortgage, a buyer can expect to pay something on the order of three quarters of a million dollars by the time the loan is paid off. Given the tremendous amount of money at risk with such a purchase, it makes a lot of sense to plan the purchase ahead of time. By planning a home purchase in advance, buyers can arrange the best and most affordable financing. They can also take extra time to make sure that the house suits their needs and that it doesn’t have any problems that might make living in it a nightmare. Here are a few suggestions as to how a prospective buyer might plan ahead: Check your credit report – This makes sense as a place to start; it’s where the lender is going to look first. Your ability to land affordable financing is going to be based upon your credit history. Do you pay your bills on time? Do you have any judgments against you? Bankruptcies? Any one of these things could affect your ability to secure a loan at an affordable rate, or even to obtain one at all. If you have some unpaid bills, you need to pay them. If your credit report contains errors, and nearly 25% of them do, you can take action to get them corrected before the lender sees them. Shop around for a lender and a real estate agent – Take the time to find individuals who are experienced and understand your needs. You don’t want someone who will get you a loan; you want someone who will get you a loan with which you are comfortable. Meet with a number of people and find someone that can help you and with whom you feel comfortable doing business. Get loan preapproval - “Preapproved” means that the lender has checked out your finances and has, in essence, agreed to lend you money. There is a tremendous difference between “preapproved” and “pre-qualified”, where a lender only takes a cursory look over your finances and says, in essence, “Sure, he/she could probably qualify.” If you are preapproved, you are ready to borrow and you can act in a hurry if the right property becomes available. With prequalification, you will still have to wait, perhaps for months, to get approved. Find an appraiser – Appraisal fraud is very common in this industry. You should try to find an independent appraiser who will work for you, rather than the lender. What you want is someone that you can trust to deliver an accurate assessment of the property’s value. Thousands of people have been duped in the past few years by lenders and sellers who misrepresented the value of their property. You don’t want to become a victim. A few simple steps taken six months to a year before you plan to buy a house can go a long way towards making the process go smoothly.
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