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Three Steps to Help You Begin the Home Buying Process - Part 1 - 2008-01-20 |
If you are one of the many potential home buyers who are sitting on the fence, I'd like to offer a piece of advice: now may be the time to jump in and buy a house.
That's because conditions, both interest rates and seller flexibility, are advantageous to buyers like you right now.
And if you've never before purchased a home, you may be wondering exactly where to begin. There is no shortage of advice, but much of it comes from someone who is trying to sell you something.
If you want to learn more but don't feel confident walking onto a real estate office, you are not alone. Here are three steps you can take that will give you information, answer some of your most important questions, and still not obligate you to anyone or anything.
1. Order a free copy of your credit report.
Never before in the history of home lending has your credit score been so important in the loan approval process. Lenders rely heavily on your past credit experiences to predict the likelihood that you will pay on time each and every month.
And all that experience is boiled down into a three digit number called your credit score. You can't get your score for free, but you can get a copy of your credit report, and that is the information used to generate your score.
So my advice is to start your home search by taking a look at your credit report. You can obtain one free report annually from each of the three major credit reporting agencies by visiting annualcreditreport.com.
Your credit report is simply a list of any credit that has been extended to you over the past seven years. It will show all your credit cards, store accounts, lines of credit, and past due bills you may have had. It will also show any public records such as bankruptcy, liens or judgements in your name.
It is important that you review your report for accuracy before you begin your home-buying, because an error or discrepancy might lower your score substantially, and mistakes do occur.
2. Meet with a loan officer of a major home lender.
This may sound threatening, but it's really not. Simply select a local office of a home lender, call them up, and request a meeting. Tell them you want to get "pre-qualified" before you start your home search, and you want to find out more about the types of loans they have available.
If you need a recommendation of who to call, ask your banker or your pastor if they know of a reliable home lender with a physical office near your home. I do not recommend that you do this over the phone, because there is a tendency to rush a phone interview, and you may need more time than that. Also, it's not important which lender you choose at this point, because you are simply in "fact-finding" mode and will shop and compare among many lenders when the time comes to source your loan. But that is much later.
Tell the lender that your goal is to find out approximately how much house you could qualify to buy under their most popular loan programs. Have him explain each one to you, and make sure to ask about "fixed rate loans" because that is probably what you will want when you find your dream home.
At this point, you should show the lender your credit reports, and tell him that you are interested in knowing your credit score. If the lender is serious about wanting your business, he will likely offer to obtain your credit score from each of the three agencies and share that information with you.
Know that home loan underwriters typically order all three scores, then discard the top and bottom score. In most cases, the middle score is the only one that matters. If your lender doesn't offer to obtain your scores, find another lender.
Once you have obtained your credit score and your credit reports, study the consumer information at myfico.com for details about what makes up your credit score and how you can raise it in the future.
3. By now, you should have learned a fair amount about the relationship between credit and your ability to borrow for a home. You should also know more about the types of loans available to you, and you should have a ballpark idea of how much house you could afford if you wanted to buy.
The next step in your education is to find a non-credit course in home-buying offered by a reputable institution such as a local community college or a local bank or credit union. These courses are usually several hours in length, and cover the home-buying journey from beginning to end.
The course should cover financing, qualifying, and obtaining your loan. It should talk about the advantages and disadvantages of new construction versus resale homes, and it should examine the roles played by real estate agents and home inspectors. In addition, any worthwhile class will cover the steps involved in the home search process, and give you advice on how to shop and compare for both your real estate and your loan.
My experience is that first time buyers who take advantage of these courses are more confident in their approach to the market, and they end up making better decisions because they have a clearer understanding of their alternatives.
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Upcoming Events
BUYING FORECLOSURES IN GEORGIA
NEW for 2008: Bank-Owned Home Bonanza
This seminar has been updated and revised for 2008 to reflect the dramatic changes in the Georgia foreclosure marketplace. We are literally facing a flood of foreclosure properties, and there is profit to be made in each and every one of these homes.
Whether you want to build a portfolio of homes for your retirement or you simply want to find a better home for yourself and your family, this program is for YOU.
LAST CHANCE THIS MONTH!!
• Saturday, Oct. 11th, 2:00 P.M. until 5:00 P.M. - Renaissance Waverly Hotel in the Cobb Galleria
This COMPLETELY NEW SEMINAR examines the roots of today's foreclosure meltdown and explains how you can take advantage of this opportunity in your spare time.
Advance Tickets: $69; bring a friend for an additional $30.
Couples share materials.
Detailed information available under the “Seminars” button
This course approved for 3 hours of Continuing Education credit by the Georgia Real Estate Commission.
The Real Estate Investor's Institute will be held at Emory University on
November 22, 23 & 24, 2008. Make plans to attend.
Detailed information is
available under "Seminars."
This course is approved by the Georgia Real Estate Commission for 12
hours of Continuing Education Credit. Agents must bring license number.
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