Preparing to Buy a Home

In my initial blog post I mentioned how much I love helping people find the perfect home, especially first-time buyers. Here, I am beginning a series that will take you through the entire home buying process, from where you are today to closing on your home.

Even if you are months, or a year away from purchasing a home in Central Florida, there are steps you can take now to better prepare. Here's a look at how you can “get ready to get ready”.

1. Get your credit in order. Look up your credit score and check it for errors. Focus on making all your payments on time. A credit score of 580 or more can qualify you for a lower rate on a FHA loan. For our US veterans, a VA home loan may be available and most VA lenders will look for a credit score of 620+. A majority of home buyers will receive a conventional home loan and will need a credit score of 750 or higher.
2. Do not make any major investments or purchases. A lender will look at the bank statements for every applicable account. If spending appears erratic or there are not enough funds to justify a loan, the loan could be denied.
3. Do not open new credit cards or other lines of credit. Lenders want to feel confident that the lendee is financially responsible. Open lines of credit  (even if it has a $0.00 balance) make lenders nervous because the borrower can (potentially) rack up more debt than he or she can handle. Having a credit card or loan will not automatically result in a denied loan application, however, it is a factor, so just be cautious.
4. Stockpile savings for a down payment. The larger your down payment, the more friendly the terms of your mortgage and the lower your monthly payments can be.
5. Make a list of your “must haves” and “deal breakers”. Is a pool a necessity or a deal breaker? How about multiple baths or a backyard? There are likely some things your home absolutely must have, and those it can't have. This is not a list of “desires”, but negative and positive absolutes.
6. Determine acceptable locations. Keep in mind in some parts of Orlando, even a short distance can mean a long commute. Determine those parameters and draw a radius on a map to give you a general idea of where you may want to begin your search for a home.
7. Think about how long you may live in the home. Many people will buy a home based upon their current situation. They may not consider what that situation may be in five years. Others may buy with the intention of selling in a few years. You may not know for sure but it is a good idea to have a frame of reference for how long you will live in your new home.

Coming up next, we'll take a look at why mortgage rates may be more important than price when buying a home.  If you have any questions or comments, please feel free to contact me!