Buying a Home – Getting Started

Buying a Home - Getting Started

Thinking of buying a home? The time’s never been a better time, but there are important tips to follow before you begin your search:

Pay all bills on time! Not just your monthly lease payment (but pay that first!), but everything: credit cards, car payments, utilities – everything. Lenders will require copies of your bank statements and will run background checks and credit checks to determine your ability to repay the loan. Make sure everything they see is good!

Don’t buy anything new! No large purchases: jewelry, vacations, flat screen tv’s. And this is NOT the time to buy that new car. Debt on large ticket items lower your credit score substantially. Why? Because they change your debt to income ratio significantly. This means that what you owe becomes too close to what you earn and the banks will see that you can’t afford to take on more debt. Keep your debt down so the lender will determine that you can, indeed, afford your new house payment.

Don’t change jobs! Lenders look for a history of stable employment. The exception may be if you get a better job in the same profession with a salary increase but, if possible, don’t make any changes until after you’ve gotten the home.

Why these warnings? We’ve had buyers get their credit score high enough to buy the home they’ve been wanting, only to go out and buy a car first. Then what? They no longer qualify for the home. Or, (this happens too often) buyers get qualified for their new home, go out before they’ve closed on the home and buy new furniture for it, then they no longer qualify to purchase. Lenders will do a final check on you the day before or the day of closing to make sure nothing has changed. Once you’re approved for your loan, make sure nothing on your credit report changes!

If you have questions about things like, should you take this new job, check with your lender. See what qualifications they require. The basics stay the same but their details will vary. Perhaps you can wait six months and change jobs after you’ve moved into the home of your dreams.

To get started, check your credit score. See if there are any incorrect items listed. If so, write to the credit bureau to have them removed. Check with a credit repair person or your lender to learn what things you should do first to most improve your score. Start the process there.

And, be sure to check out my buying book, The Essential Handbook for Buying a Home for tons of buying information – only $2.99 as an eBook.

Good luck. Now go out and buy your new home. If you have questions, ask them here. I’d love to help you buy your home. Owning a home, after all, is still the American Dream!

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