Believe it or not, what you may initially want and describe to your Realtor may not be the house that finally “talks” to you, and that you simply must have! Regardless, there has to be a starting point and the best place to begin is with a written list of specific criteria.
For instance, your wish list may look like this:
- Three bedrooms – 2 baths - Safe neighborhood - Good schools, (if you don't have children, think in terms of future re-sale) - Garage with extra space for a work shop - Deck and nice yard for entertaining - Convenient to Downtown - Master Bathroom with Jetted Tub -First Floor Master Bedroom with Walk-in-Closet - Gas Fireplace - No major repairs - Affordable Property Taxes -Public sewer & Water -Finished Basement for recreation room or home theatre -Lot of natural daylight -Eat-in-Kitchen -Granite or Silestone Kitchen Counters -Ceramic Kitchen floors -Gas Cooking
The thing to consider is how your list would change if your qualified price range limited you to perhaps 10 items on your wish list? If you had to narrow it to less, what would your top and most important priorities be? This information is crucial to your Realtor as he or she matches your most important criteria to available homes in your price range and preferred locations.
Let's talk Finances!
One of the very things you'll wonder about is what can you afford? It's important to determine what you can pay on a monthly basis after making a downpayment anywhere between 3 and 20 percent (depending upon your loan) of the asking price of the house. There's more to a house than just the mortgage? There are property taxes, insurance premiums, utility bills, maintaining all maintenance and funds that need to be set aside for unexpected emergencies.
A trip to the loan officer will place you on the right track! Your Realtor will very likely be able to recommend someone who will be able to determine the price range you can comfortably shop in. This is called the “Pre-qualifying process,” and it is a free service with no obligation to use that particular lender. Of course, you will be in a for a sales pitch, as the lender will certainly hope to get your business when you are ready to apply for a loan, but again, it's a free service, and it's also a good idea to shop around for the best rates and least amount of junk fees.
Based on personal experience with my clients and my personal transactions, it is best to use a lender with a local presence, and a direct lender. That way, if there's a glitch at closing, it can be tended to immediately and every thing is taken care of quickly and in a real-time manner. A local lender will also assign an appraiser who is familiar with properties in the area you are purchasing, and therefore, the appraisal will be less likely to have major red flags.
A pre-qualification letter will give you a very surface idea of how your income, assets and liabilities will determine what you can afford and will also enhance your chance of beating the competition if faced with multiple offers on a property you are after.
When you do get to the actual point of making an offer, that pre-qualification letter will have to turn into a pre-approval letter. This will have a cost, as it requires the loan officer to run a detailed credit check and will very accurately determine what price range you may shop in. This is also the letter that must accompany most offers for the Seller's peace of mind. Most people who wish to buy and want to be able to submit an offer without any hesitation will opt to have a Pre-Approval conducted from the very beginning.
If you plan to buy within a 90 day period, it makes sense to have a Pre-Approval conducted at the start of the buying process.
Lark Logan, Realtor, ePro, Licensed in the Commonwealth of Virginia Long & Foster Realtors, Inc. - Village of Midlothian Sales: 1100 Jefferson Green Circle, Midlothian, VA 23113 Office/Page: 804-794-9650...E-mail: Lark@LarkLogan.com