Big Don’ts, If You’re Planning on Buying A Home!

1. Don’t make any major purchases if you’re in the home-buying and loan-qualifying process. This means, weddings, vacations, cars, furniture, electronics or even jewelry. When you go to pre-qualify for a mortgage your debt-to-income ratio is critical. This is the percentage of your gross monthly income before taxes that you spend on debt. This will include housing costs, taxes, insurance, and also any debt that you have on credit cards, car payments, student loans, money owed on installments. You may be able to afford these payments but they all add up to determine the loan amount for which you qualify. You don’t want to have your eye on the property of your dreams and be told by your loan officer, “You shouldn’t have bought the SUV, without it you would have qualified for this house!” Take the vacation or buy the car once the deal is closed.

2. Don’t change jobs unless you have to. Stability is key when it comes to looking good in terms of your qualifying for a loan unless of course you’re moving and buying due to a job transfer. If your job transfer is a promotion and an increase in salary, all the better.

3. Don’t move your investments, change banks or money between accounts. Once your loan officer sends your file to the underwriter, the less of a paper trail that has to be followed by the better. The underwriter meticulously will track every payment, every investment, every charge, and every expenditure. Buying or selling stocks, moving investments between accounts or even moving money between bank accounts, does not create a picture of stability and creates a more precarious situation for your approval.

Tips-Buying In A Low-Inventory Market

1. Know the difference between a good opportunity and an impulse buy. Do your homework and learn about the neighborhood and the market in the area. Get information from your Realtor about comparable properties in the area, finding out what else has sold and at what price. Is property priced excessively low? Has it had many price reductions over several months? The more you know, the better position you will be in to buy.

2. Be prepared to pounce if you need to! Get pre-approved and have the necessary cash on hand for down payment and closing costs. don’t let financial snags be the reason you don’t get your dream home. You won’t be the only bargain hunter out there so be ready if the right deal comes your way.

3. Set a price limit for the property and stick to it. Bidding wars can be a waste of time and often emotions can get the best of a buyer. Determine your top offer at the beginning and determine a ‘walk away’ price, at which you can walk away from the deal with no regrets!

4. Motivated sellers are a good thing but in a market where there are few homes to choose from, savvy sellers oftentimes have the upper hand. Your agent should have a feel for whether offers coming in and can ask the listing agent for a heads up, should another offer come in. How hot is this property? Your Realtor can tell you how long a property has been on the market, how many price drops have occurred, whether the property is vacant and the seller has moved, and other valuable information. Deed information is generally available to the public and a potential buyer can find out what the seller originally paid for the home,

5. Make sure the property has a clear title. The seller may be forced to sell because they are in over their head. A title search can assure the buyer that the property can be transferred without risk and that they won’t be absorbing contractor or other types of liens on the property. If a property is in foreclosure or bank-owned, make sure you understand what this means in terms of risk and timelines.