Thinking about Buying a Home?

Posted on August 12, 2008 | by Denny Oh

When youre thinking about buying a home, there are certain things you should and shouldnt do.  Here are a few

1. Do not quit your job.  Unless youre planning on paying cold hard cash, do not quit your job.  Lenders like to see a steady employment history and if youre self-employed, you should be in the same industry for at least 2 years to make underwriters happy.  If you are thinking about making a career change, talk to you lender first.

2. Get your credit checked.  The sooner you see what your FICO is, the sooner you can work on fixing it(assuming you need to raise your score).  As lenders get stricter on their requirements, a difference between a FICO of 680 and 700 could make all the difference.  And when you do get your credit checked, make sure you get a tri-merge score, which is what the lenders will eventually use to qualify your mortgage rate.

3. Dont be late on payments.  We all get busy and occasionally forget to pay bills on time.  If youre looking to buy a house anytime soon, make the extra effort to keep track of simple things like paying your bills on time.  A late payment could hurt your FICO just enough to increase your mortgage rate 1/8th-1/2 points, or worse, it could drop your FICO so that you no longer qualify for your loan.

4. Find a good Realtor.  This doesnt mean finding one that just sells a lot of homes, or one whos face you see on a bunch of bus stops.  This means that you find an agent you can trust.  One that returns your phone calls and emails promptly.  Find a Realtor who knows what theyre talking about and when they dont know the answer, theyll do some research and get back to you.  Most importantly, find one that you think will stand up for you and represent you in the best way possible “ dont just use your friends sisters cousin because theyre going to be mad at you if you dont use them.  Buying a home is a big deal “ treat the job of finding the right agent like one. 

5. Make a budget.  Im not saying you need to write down every penny you spend, but it would help to go over your expenses and see how much money you could invest in your future home.  Talk to your accountant to get an idea of how much youll save on taxes.  Factor in home repairs, HOA fees, property taxes and other items.  If you need help, talk to your Realtor and lender.

6. Get Pre-Approved.  Talk to a lender and fill out a loan application.  This is a pretty quick and easy process, which will allow you to accurately determine how much you can/want to spend on your monthly mortgage payment.  Similarly, this will also help you determine what price range you should be looking at for your future home.

7. Think about the future.  Obviously we cant predict the future, but we can make some assumptions based on what we want.  If youre getting married and are thinking about starting a family, think about how much room your need.  Think about how long you want to be in your future home and what schools you want to send your kid(s) to.  Is parking going to be an issue?  Will your future home have room for that boat youve always wanted?  Where will you be working in 2 years?  How will the commute be?  What stores, shops and businesses are in that area?  Im not suggesting you plan your entire future around the next home you buy, but put some thought into it.  And on the other side, keep in mind that your next/first home probably wont be your last.

If you have any questions, suggestions or comments, please dont hesitate to contact me at 858“243“2092 or denny@sandiegoh.com.

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