1. think twice about buying if you might have to move in the next few years.
If you night have to move soon and you can’t commit to staying in one place for at least a few years, then buying a new home might not be the thing for you, at least not for now. With closing costs of buying and reselling a home, you will probably end up losing money if you sell with in the first few years , even if the real estate market is a rising market. When prices are falling, it’s an even worse proposition.
2. Clean your credit for a better credit score.
Most of us will need to get some type of financing to purchase a home, Please make sure your credit history is as cleaner then ever. I would start cleaning and checking my credit score and history almost a year before looking for a new home, get copies of your credit report. See if the facts are correct, and clean any problems you find.
3. Can I afford this home?
One way to calculate if you can afford buying that home is to multiply your annual salary by 2.5 . you might want to try one of many calculators available online just to make sure you are doing it right, I would also use a mortgage banker or broker.
4. Check the school districts in the area you about to buy.
The best way to find out all that you need is to check the School District Demographics System by the board of education at http://nces.ed.gov/surveys/sdds/ The School District Demographics website provides access to school district geographic and demographic data useful for describing and analyzing characteristics of school districts, children and K-12 education
5. Use the Internet as it gives buyers unprecedented access to home listings.
Using the internet you can find residential and commercial listings for sale or rent. In most sites also provides you with real estate information at the local level to help you make better decisions in the process. If you are a New York City Buyer try InsideRater.com the site has a unique building rating section that should help you find your desired space, it also had empowered thousands of savvy consumers by providing them with a vehicle of knowledge. You will also find data and information about your local real estate market without too much work. The delightful building rating function should make your decision making easy and fast.
6. Choose the right financing.
Comparing loans of different lenders is often the most difficult part of mortgage shopping. Firstly, it is important to keep in mind that mortgage packages consist of more than interest rates. They consist of a quoted rate, points and closing costs.
Points are an up-front fee paid to the lender at closing. Each point equals one percent of the loan amount. Points are charged, or paid, to lower or increase the rate on the loan. Closing costs typically consist of loan related fees, title and escrow charges, government recording and transfer charges and can add thousands of dollars to the cost of your loan.
Secondly, when comparing loans of different lenders you need to thoroughly investigate and compare all loan features: maximum LTV, mortgage insurance payments (if any), credit and cash reserve requirements, qualifying ratios, etc. Pay special attention to the presence of prepayment penalties and the availability and terms of conversion options (such as rate reduction option, or option to convert an ARM to a fixed-rate mortgage).
Thirdly, for each loan you are comparing find out the lock-in period, during which the interest rate and points quoted to you will be guaranteed. Lock-ins of 30, 45 and 60 days are common. Some lenders may offer a lock-in for only a short period of time (15 days, for example). Usually, the longer the lock-in period, the higher the price of loan. The lock-in period should be long enough to allow for settlement before lock-in expires.
Finally, make sure that you are comparing the interest rates on the same day. Rates change daily, if not a couple of times a day.
7. Pre-Qualified Vs. Pre-Approved.
Getting pre-approved will you save yourself the grief of looking at houses you can’t afford. All a pre-qualification establishes is how much money you may be able to borrow. A buyer should be aware that they may not actually be approved for the loan amount suggested because of various factors that are not calculated during the pre-qualifying process. These factors include your exact net income, taxes and expenses, outstanding credit balances as well as many others. Because you have not actually applied for a mortgage the financial institution only has your word to go on.
Pre-approved goes that extra step further. When getting pre-approved you may get a letter stating how much money you can borrow. Your lender will pull your credit report and find out what your financial liabilities are. However not everything is varied at that time. Assets and income will be verified when you submit the final mortgage application.
8. Check for final things before you bid.
New homes can be just as problematic as old ones. In fact, because they haven’t been tested by years of use and abuse, they can be filled with problems, especially if the builder used any shoddy practices. Hiring a qualified house inspector before you buy is a major hedge against very expensive surprises.
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