Whether you are a first time home buyer or a repeat buyer, 2011 is a great year to buy a home. With so many foreclosures and short sales out there, it’s hard not to find a home priced less than it’s current market value.
Here are 3 important tips of advice for buying in 2011:
Get Pre-Approved First
All to often I receive a phone call from a customer that’s looking to get pre-approved for a mortgage, because they already put an offer into a home. Seriously? Even if you know you have great credit, tons of assets, etc. the lending world has basically turned upside down in the recent years. With changes happening almost monthly, mortgage guidelines are much different than the last time you bought a home or think that your good credit and lots of money will get you approved. Yes, those are great, but you will be surprised what changes have been made.
For example, if you are looking to buy a condo, many lenders require a 10% down payment. Even though with conventional mortgage loans you only have to put 5% down, the lenders set their own overlays on top of Fannie Mae guidelines. This is something most buyers don’t even know until they talk to their loan officer.
A pre-approval letter is expected by your realtor and the seller of the home. They both know how much more difficult it is to get approved for a mortgage, so they expect this letter when you put an offer into a home. Some realtors even require this before showing you homes.
Know Your Mortgage Options
There are tons of mortgage programs out their for bad credit, no down payment, small down payments, etc. Working with an experienced loan officer will put you in a great position in understanding what options are out there. There are even programs that don’t require PMI (private mortgage insurance) as part of your mortgage payment with less than 20% down. Typically, this can only be avoided if you put have a 20% down payment.
Take the time to ask about these programs and don’t be afraid to ask more questions if you don’t fully understand. Buying a home comes with lots of things to know and understand, especially if you need a mortgage loan.
Foreclosed Homes
There are so many foreclosed homes out there, it’s hard not to find a good deal. What you need to be prepared for is the condition of the home. Many foreclosed homes sell “as is”, which means the lender that is selling it will not repair anything, even if you ask. You may find something small like old 70′s carpet with wall paper only your grandmother would pick out, but you may also find holes in walls, old roofs, basement problems, etc. You need to be prepared when choosing a home that needs major repairs, because you will be limited on mortgage loans. There are mortgage programs specifically for homes like this, so make sure your loan officer offers these types of programs, because lenders will not approved a mortgage with a home “as is” if there are major structural problems.
You can take a look at foreclosed homes for free for 7 days at www.RealtyTrac.com
Here are some other posts that will help you with buying a home:
How To Figure Out The Value Of A Home
How To Get A Good Price On A Home
