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Things to Know for Homebuyers

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I saw an article today on CNNMoney called the top things homebuyers need to know and I don’t think they tell you enough on some very key and critical points. For example, they give the advice that you should clean up your credit because it’s important in the lending process (it, among other things, determines your interest rate) but it misses a key fact: You shouldn’t be trying to improve your score, you are merely checking for errors and inaccuracies. You can’t improve your score significantly in a month or two, the equation just doesn’t work that way, so don’t look for a magic bullet but do check for errors which can improve your score since the errors should be investigated and removed within thirty days. There are more…

A lot of these “things” are common sense, such as “Don’t buy if you can’t stay put” (#1) and “Hire a home inspector,” (#10) and don’t need much explanation to get the full point across. But here are the ones that need just a tad bit more information.

4. Don’t worry if you can’t put down the usual 20 percent.
This doesn’t mean an option-ARM is what you want (where your monthly payment doesn’t even cover interest), know what you’re getting into when you sign on the dotted line. Don’t buy into the hype of the hot housing market… buy smart, or wait.

5. Buy in a district with good schools.
The idea behind this nugget of advice is that you should be considering your exit strategy. Are you planning on living there a few years and then renting it out? Do you want to live there, sell, and upgrade? Good schools means your target customer base improves to include families with children. If you’re planning on renting it out and earning some income, you probably want to buy a place in a city with young professionals.

6. Get professional help.
You don’t need an agent to find a house, but you need an agent to go over the paperwork, fill out a contract, and does all the legalese stuff to make sure you aren’t getting screwed. Plus, you aren’t paying for the agent, the seller does. Perhaps you can knock off a little from the sale price by going without an agent, but what if you mess up the contract? And if the other guy has an agent, you might get steamrolled later on for something… the agent has to earn that commission right? Don’t go into a gunfight armed with only your wits.

8. Before house hunting, get pre-approved
They don’t stress this enough… if you are not pre-approved, in this blazing hot housing market, you are not even going to be in the race. You could offer tons of money, but its all fairy tale money because the pre-approval proves to the sellers you have enough credibility with a lender that you could get a loan. The pre-approval process will demand you show pay stubs, bank account records, etc; it’s pretty exhaustive. Pre-qualifications (one step before pre-approvals) are worthless, don’t waste your time getting one.

What do you think of my clarifications? Am I totally off-base? I’m very interested to hear your comments on this one.

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2 Responses to “Things to Know for Homebuyers”

  1. Ingrid Ricard says:

    You gave some good advice

  2. Angela says:

    Hello we are a family of 5. And we are looking to rent our first home. And seeking to but a bigger one and your advice was very helpful!!!

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