Over the last couple of months we have covered issues related to financial well-being. If some of those ideas have been put into practice it may be time to think about purchasing a home. Even if you already own a home it may have been awhile since you have gone through the process so below are some of the basic things you will need when purchasing a home.
One of the first things you should do is get pre-qualified for a loan with a mortgage loan professional. Please note that your credit report will be checked, so it is better to disclose any adverse things that may be on it (such as delinquent payments) early. Once pre-qualified, the information can help guide you and your chosen real estate agent determine what you can reasonably afford to buy. As you are starting this process now is the time to locate many of the documents you will need to secure a loan. Do you have copies of the last two years of your tax returns? Do you have your W-2 forms readily available? What about current pay stubs? The documentation for any other forms of income and assets (such as bank accounts) need to be provided. Any debts you owe must be disclosed as they will also be reviewed to determine the amount of payment you should reasonably be able to afford.
You should be very careful once you begin the process all the way through buying the property to document any extra money going into your bank accounts that you have not already accounted for, where it came from, and why you have it. Although a small deposit may seem inconsequential it can affect your loan. Another thing to be careful of is not taking on any additional debt during the process. You may believe that is common sense, but many deals have been terminated before completion when the borrower decided to go out and make a purchase on credit such as a new car or furniture. Once the new debt is incurred it can typically put the borrower’s debt to asset ratio in an uncomfortable balance for the lender.
There are other decisions you will need to make, and you will also need patience as you move through the process. Once you have selected a house you will need to work with your agent to make an offer, and sign a contract to buy it if the offer is accepted. The home will go through an appraisal process and inspection. You, along with your lender, will know if the home appraises for the amount you are contracted to purchase it (a good realtor will help to avoid surprises). A home inspection is also necessary, and you (in conjunction with the seller) will make decisions on things that may be found during the inspection process. You will also have an insurance agent whom you will choose and usually an attorney whom you will be working with during the closing.
Asking your mortgage professional questions about the process early is a good way to avoid potential hiccups later. Working with trusted professionals can also help you navigate the process of purchasing your next home while making the process rewarding for you.