The purchasing a home can be an exciting experience. Finding new neighborhoods, driving around new parts of town, & meeting neighbors & getting the skinny on the pros/cons of the neighborhood can be fun. Even peeking into a vacant home (there are a lot of them nowadays!) or dare I say 'breaking' into one that's open can really make the Sunday search enjoyable. The biggest way to put a damper on all of that is to find a home that you are in love with only to discover that you either that you can't afford it, your loan program won't finance it or worse, you can't qualify for a loan at all! A common occurrence is potential home buyers searching online, driving around to look at homes, and even calling agents to inquire or even view a home without getting pre-qualified first. Just like with buying a car, any radio talk show will tell you that you need to figure out your buying power first before even stepping foot into a dealership and I'm here to tell you that purchasing a house is no different. Here are the top reasons why you need to get pre-qualified FIRST before looking at homes.
Know how much you qualify for!
Without knowing your price ceiling, you will more than likely begin looking at homes that are above your price point. Some people have champagne taste and beer money so you want to be sure you have a realistic expectation on what you can get in a home. With today's market you can definitely get more (size,aesthetics,better areas) that you could just 4 years ago.
Determine your type of financing
There are two basic types of loans available, conventional and FHA loans. With FHA loans there are numerous guidelines that a property must meet in order for a your lender to allow you to secure a loan for it. For single family homes it must pass an FHA appraisal and cannot have more than $5,000 in repairs. More recently, a condo is a much more difficult buy using an FHA loan with new requirements in place for the COMMUNITY that the condo is located in. If the community is not FHA approved, you won't be able to buy in that complex.
Maybe you can't qualify
If it comes to light that you cannot qualify for a loan, the earlier you discover this the better. If you have a set target date ( i.e. a lease that's up in a few months), you want to get pre-qualified early to ensure there are no items on your report that need to be removed, disputed, or accounts with balances that need to be paid down or settled. With issues like these, once you fix them, it takes time for your score to rebound. You don't want to find out at the last minute that you'll need 3-6 months to be able to qualify when you've been actively looking to move already and could have been fixing these items when you first decided to purchase.
You can contact me directly at rousereo@gmail.com for more tips and suggestions regarding this topic
