Thats What I Say

Foreclosure rates are up. Mortgage interest rates are down. It is a buyers market according to nearly every newscast and article I have read pertaining to real estate.   If you already own a home this is not the ideal time to try to sell your home. Market values are down and it is difficult to get what you paid for a home much less make enough profit to get into another home.  If you are thinking of purchasing a home I have a few suggestions that might make you change the way you search for your new home.   Pull your credit report but do not pay for it.  You are allowed to pull your own credit report once a year without charge through the credit bureaus such as Experian without signing up for anything. Look over it carefully for lines of credit or credit cards that are not yours or open and forgotten.  Even if you don’t use a credit card that credit limit that is available to you affects your scores and ratios.  If you have a credit card with less than 25% of the credit limit available to you that can adversely affect you as well. It might not be necessary to pay off your credit card but if you pay it down to where you owe 60% of the limit it will affect you less when applying for a mortgage.  If there are any incorrect entries on your report file a dispute. It can take 30 days or more for a correction on your credit report to show up so allow time for that.   While you are getting your credit report straight you can start thinking about where you want to live. Neighborhoods are very important and can affect the value of your home.  Do a little research on crime statistics, schools, proposed developments.  When we moved to Papillion, Nebraska I was surprised to find that they do not provide busing or transportation for public school students. As a homeschooler this did not affect me personally but it is a struggle for many people I have met here to get their children to and from school and work full time. You can’t know too much about your potential neighborhood.  www.familywatchdog.us   is a website that will show you a map of registered sex offenders in any zip code.  Another good thing to check on is the tax rate in that county. Your property tax can change your monthly mortgage payment and keep in mind that the taxes rise but when is the last time property taxes were lowered? Are there many rentals in the neighborhood? The number of houses that are rentals or foreclosures can affect the look and feel of a neighborhood. Vacant homes often times invite vandalism and crime.  Once you have an idea of where you would like to live it is time to go talk to a loan officer or mortgage lender. Check their credentials first. Look at Better Business Bureau to see if there are any complaints about them.  Many people see a realtor before getting qualified or prequalified for a mortgage which is a mistake.  Why waste your time and the realtor’s time looking at homes that you may not be able to purchase. Make an appointment with a lender and bring in your tax returns, pay stubs, social security numbers and any other financially pertinent information.  Based on your income, debt and credit score your lender will be able to tell you what price range you are able to purchase a home from.  Based on what loan you qualify for you may have to put up a down payment. Zero percent down loans are becoming increasingly rare.  Often mortgages require 3, 10 or even 20 percent down. If you borrow the down payment that affects your debt to income ratio.  The interest rate that you qualify for is determined by credit history, loan type and down payment amount in some cases.  To receive the better interest rates for many loans you must have a credit score of 720 or higher.  Once you know your credit score and what you can afford to buy then you can contact a realtor. Ask friends and neighbors if they recommend a realtor. Again, checking the Better Business Bureau is a good idea. Meet with several realtors to make sure you are compatible as you might be spending alot of time together. Someone who is unorganized and unprofessional is not who you want involved in one of your most important financial transactions of your life. Does your potential realtor have your needs in mind or their sales quota? A competent , licensed realtor can make all the difference. They know the neighborhoods and can provide some great advice. Just make sure you are on the same page. They say knowledge is power and that is very true in today’s market. Knowing what you want and what it takes to get it will help you get into your next home.