Things to Remember About Buying a Home
One type of home buying advice involves teaching yourself how to look at your credit, income, and other loan qualifying topics the way your lender will.
It is the sort of advice you might think is saved for credit-related issues, and in that context, it is sound advice. Learning to think like a lender may help you decide when you are truly ready to apply for a major loan such as a mortgage. But big picture, “think like a lender” is advice that extends to issues including the type of house you want to buy.
One great example is when a home for sale gets an appraisal, your lender’s review of the report includes the appraiser’s review of specific features of the property but also “comparables” or similar houses in the local area.
You can do this too. Note the size and type of home you are looking for and be sure to compare it to similar models in terms of age, condition, price, and location. How does the home you want compare with others in your market?
The goal here for a new borrower? To get an informed notion of the market overall.
It is also a good idea to stay on top of local housing trends where you want to buy your new home. Ask a real estate agent in your local area; at the time you want to look for a home is the zip code in a buyer’s market or seller’s market?
In a buyer’s market, there may be plenty of supply for the demand. In a seller’s market, high demand for homes and a comparatively low number of houses for sale could mean the seller has an advantage. It’s good to know what kind of negotiating environment you’ll be in when you are ready to make offers on a house.
And then there are job concerns. Are you planning a major career change? Starting your own business, separating from the military, or becoming a commissioned employee after an extended time on salary? If so, the timing of your home loan application will become more important. The reason?
A lateral job move may or may not be an issue with some lenders, and you will need to talk to a loan officer about that financial institution’s standards. A major shift in employment, such as from salary to contractor, may require the lender to certify you have a minimum amount of time in the new job (think 12 - 24 months depending on circumstances) and earning type before a loan can be approved.
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