Home Buying Tips

UMPC News

Before you rush out and start looking at houses you might want to buy, use this checklist to prepare.

Do a Self Credit Check

You should get copies of your credit reports from all three major credit reporting agencies. You should ideally do this six months before you go house shopping. Thay way, if there's an error or another problem that could keep you from getting a mortgage, you'll have time to straighten it out. It's devastating to find a home you want and then get turned down for the loan. The cost for these reports is minimal compared to the savings of money, time and emotion later. Follow these links to get the process started:

Get Your Paperwork in Order

To avoid the headaches, the long phone waits, and the paperwork jams associated with getting a mortgage, organization is key. Take an hour or two to pull together the documents each and every lender is going to want to see. Here's what you'll need:

  • Earnings statement (or proof of self-employment), including your W-2 forms, pay stubs, and tax returns.
  • The contract for purchase of your home.
  • Debt-related information, including credit card numbers (with the address and phone numbers for the banks that issue the cards), and any car loans.
  • Bank statements for the last three months (again, with addresses and account numbers.).
  • Cancelled checks or other evidence of mortgage or rental payments.
  • Tax returns for the prior three years.

Get Prequalified

If you prequalify for a mortgage, you will know how much house you can buy. People tend to waste a lot of time, and a lot of a real estate agent's time, looking for a home above the price they should be shopping.

You can prequalify with any bank or credit union. I have found it easier to prequalify for a mortgage online. That way you can do it from the comfort of your own home, and have ready access to any documents that you may need to reference. There are a number of great websites for this. You can get instant quotes for exactly the kind of loan you want in as little as 30 seconds from these websites.

The amount you qualify for is the Maximum loan amount you should accept. You should probably trim the amount by about 10% to give you some breathing room in your budget.

Choose a buyer's agent

The agent whose number is on the "For Sale" sign in front of your dream home does not have your best interest in mind. He has an agreement to represent the interests of the seller. I recommend that you find an agent who works for you. Click here for more information on how to Find a realtor.

Make an offer

If you happen across your dream home and, by some luck, no one has made an offer on it, then by all means, make an offer. But what if someone has already made an offer? Make an offer anyway. A surprisingly large number of purchase offers fall through, and you can be the lucky benificiary of such an event. Make sure the offer is contingent on the home passing inspection.

Test Drive your Home

Before you buy a house, try your commute to work during rush hour. When you make a long drive from a house to your workplace on a weekend, you don't get a true idea of the travel time involved.

Also check out other things in the neighborhood. Check for public easements on your property.

Get an Inspection

You probably do not build homes for a living, and don't know exactly what to look for. So get a professional in there. It will save you a lot of money, because if the inspector finds a problem it is the seller who will pay for it, not you. You can locate a local certified inspector through the american society of home inspectors. (www.ashi.com)

Get an Attorney

When you're negotiating a contract for the purchase of a house, especially one that has not been completed yet, the contract should be reviewed by a real estate attorney. It's wise to spend some money up-front to prevent problems that could be expensive and hard to resolve. A real estate attorney also will review the closing documents. You should require in your purchase contract that the closing documents be made available to you at least two days prior to closing for review by your attorney. Real estate closings are incredibly confusing. You have no idea what documents are being put infront of you -- the lanquage is so unfamiliar and the forms are so complex -- and it's easy to make an expensive mistake. The lender and the seller both will have representatives at the closing. That's why you have your lawyer check everything.

Get Title Insurance

As part of your mortgage loan, you'll be required to purchase a title insurance policy, the kind that protects the lender in the event your ownership of the property is ever challenged. I recommend a very low-cost addition -- owner's title insurance. It protects you if anyone ever claims you are not the legal owner of the property. Owner's title insurance can cost as little as $100 if you buy it at the time you buy the house. Ask the closing attorney for a quote.