Thinking of buying a home? Get ready for an exciting experience and prepare ahead of time to help make the process a more smooth & enjoyable one.
- Check Your Credit
This can be done at www.AnnualCreditReport.com All 3 credit bureaus must allow you a free report once every 12 months. I suggest obtaining one every 4 months from another bureau instead of all 3 at once. This is great advice to always do, even if you are not in the market for a new home. Mortgage lenders are not the only people interested in your credit history & score. Other lenders (auto, personal loans, etc.), insurance companies (when determining your premium), potential employers and potential landlords are just a few others that utilize this information.
- Know Your Budget
Whether you are buying a home or not, you should have a monthly budget you are following. List and calculate the total of all your sources of income. Then list and calculate the total of your expenses. Subtract your total expenses from income and that amount is what you should be saving towards your goals and emergency fund. You should have a minimum 6 months nest egg saved up at all times (total monthly expenses X 6). Once you are a homeowner, you will want that nest egg to utilize in case of temporary loss of income, unusual high expenses (such as medical emergency) and for maintenance and surprise repairs that arise. This will enable you to see what you can afford as a monthly mortgage payment.
- Have a Down Payment Plan
Your loan type may require a down payment. There are a few ways you can cover the down payment. From your savings, borrow from your 401K plan if eligible or a family member can gift the funds for you. Right now there is a down payment assistance program called the Home Is Possible grant from the State of Nevada. Let me know if you need the list of participating lenders.
Note that when you use credit (lender credit, down payment assistance programs, etc.) it increases your interest rate on your loan so be sure to use comparison scenarios to decide if it’s best for you.
- Decide the criteria of the home you are looking for.
What is the minimum number of bedrooms, bathrooms, etc.? Is there a specific area, community or school zone(s) you are looking to live in? List your Must Haves vs. your wants. When choosing a desired neighborhood, have your Realtor provide (or check your own) sources to determine demographics, crime rates and information about schools.
- Get a Free Pre-Approval from a reputable Lender
This is very important to demonstrate your ability to purchase when submitting offers to purchase to Sellers. To simplify and speed up the process, have your “laundry list” ready when contacting or meeting with a lender (paystubs, W2s, Taxes, SS#, asset account statements, etc.) Understand your options. If you are unaware of the different loan types and options, ask your lender! (15 yr vs. 30 year, fixed vs. variable rates, Conventional vs. VA vs. FHA vs. Other)
Make sure you have a solid Pre-Approval vs. a Pre-Qualification. This will ensure less possibility of negative surprises and give you the edge if competing for a property.
Most importantly, once approved DO NOT APPLY FOR ANY OTHER CREDIT, CHARGE UP YOUR CARDS, QUIT YOUR JOB, ETC. without first speaking to your loan officer. These events can change your eligibility for the loan and the amount of the loan. Before your loan closes and funds, your lender will pull credit and verify other criteria (income, assets, etc.) still qualify.
- Shop for Home Insurance
For most, real estate property is the most expensive asset they will own. It is a big investment for you and for your lender if you are financing. Your lender will require this insurance to protect this investment. Not to be confused with a Home Warranty that you can purchase to utilize for home repairs when systems/appliances break down.
Once you are in contract, your lender and the escrow company will need to know the company you will use for your home insurance. Just like with auto insurance, you can shop around to find out who can give you the best coverage for the best rate. And it is highly recommended to shop for quotes, including from your current provider, annually starting about 1 month prior to expiration.
- For Your Protection, Get a Home Inspection!
A home inspection will only occur if you arrange for one. The lender orders an appraisal which is not the same as a home inspection. Appraisals estimate the value of the property for lenders. An appraisal is required to ensure the property is marketable. Home inspections evaluate the condition of the home for buyers. Our contracts allow for a due diligence period. You can cancel the purchase due to home inspection results or renegotiate repairs and prices with the Seller during this time.
Please contact me anytime for more information by emailing LasVegasHomesByJennifer@yahoo.com or online www.LasVegasHomesByJennifer.com
I look forward to assisting with your real estate needs from beginning through closing and beyond.