buying a house

Buying Your First Home? Don’t Make These Mistakes!

Buying your first home can be an overwhelming (and rewarding experience). There are many pitfalls that can occur during a buyer’s first purchase, so here are some helpful “tips and tricks” to make the process a little easier.

* Not Knowing What You Can Afford – this may seem like a no-brainer, but it’s all too common for prospective buyers to price themselves out of their own budget. If you do not already have a budget in place, make one (and be as realistic as possible). Once you have a list of all of your expenses, deduct this from your take home pay, and use that magic number as what you can afford to spend on a home.

* Skipping Mortgage Qualification – Going out to buy a home without pre-approval for a mortgage is kind of like flying a plane without knowing where you’re going. What a lender is willing to loan you may not match up with what you think you can afford, so be sure to find out what that amount is.

* Failing to Consider Extra Expenses – When purchasing a home, there will always be additional expenses, aside from your mortgage. Don’t forget to factor in how much insurance, property taxes, maintenance, and HOA dues will cost you.

* Being Too Picky – When buying your first home, it’s natural to want all the bells and whistles. What many buyers may not realize is that their budget may not accomodate their tastes. It’s recommended to decide on the “dealbreaker” items first – that is, items that you absolutely need to have – and let the rest fall in place. 

Information for this article provided courtesy of Investopedia.com, 2010.

buying a house

Buying a House? Last Minute Credit Checks Can Pose a Problem

For all intents and purposes, it’s pretty much common knowledge that if you are in the market to purchase a home, it’s best to refrain from making large purchases, applying for credit cards, or do anything that may affect your credit score. Lenders want to make sure that you will be good for the purchase, and to ensure this,  they canrun an extra credit check, just prior to a closing. For lenders operating under Fannie Mae, it’s a rule recently inacted since earlier this year.

Ironically, this can be an issue for both the buyer and the lender – in an effort to confirm that a prospective buyer is financially stable, the additional credit check can uncover a new, short-term debt (i.e., unexpected medical bills that will be covered by insurance) that will take down a viable sale.

In a recent development, Fannie Mae recently announced that it is reviewing their  rule about secondary credit checks. Another part of the rule allows Fannie Mae to require lenders to buy back defaulted loans – even up to two years after closing – should there be evidence of undisclosed debt prior to the closing. Should the rule be done away with, or modified, it could mean more sales, and a bigger boost to the real estate economy.

Information for this article provided courtesy of Information, Inc.