Buying a home is a huge milestone. However, the process of closing on your home can easily turn into a nightmare. Having a plan will help you avoid common pitfalls.
So without further ado, here are five steps to help you have a fast and easy home purchase.
1. Get Pre-approval
You should establish your house budget before you start shopping for a home. Use a mortgage calculator to figure out what your house payment will be. Then, choose a lender and request for pre-approval of your loan. When the numbers are sufficiently crunched, you are ready to start looking at houses that are priced within your budget. Knowing how you will pay for the house will enable you to make an offer the minute you spot the house of your dreams.
2. Have Cash On Hand
You will need several thousand dollars in liquid, readily-available cash when you purchase a home. In addition to your down payment, you may need to contribute a few thousand dollars to closing costs. This money cannot be tied up in stocks, retirement accounts, or investments if you want to buy your home in 60 days. It usually takes a while to remove money from these accounts and doing so could wreak havoc on your investment strategy. So the key here is to have plenty of cold hard cash on hand before you buy your house.
3. Don’t Put Big-Ticket Items on Your Credit Card
Your lender will weigh your debt-to-income ratio very heavily when they are considering your loan. Any major credit card purchases during the delicate loan-pending period may cause your lender to think twice. This could also cause proceedings to slow down. So, hold off on buying all new furniture for your new house until your homeownership is secured. Be sure to check your credit score (here’s a relevant article on how credit scores work) beforehand to make sure your credit is in good standing.
4. Don’t Buy a Short Sale
When a seller is forced to list their home for less than they owe it’s known as a short sale. Though short sales may sound enticing, it’s usually better to avoid them. These homes are often attractively priced and can be an amazing deal if you have the time to wait for one. The problem with short sales is that there is no predictable time frame for the lender to approve them. It can take one month, six months, or even longer for the lender to agree to take the loss. If your goal is to buy a house within 60 days, don’t buy a short sale.
5. Negotiate Closing Date
While the average home closes in 45 to 60 days, you may be able to convince the seller to agree to a 30-day closing. If the sellers have already vacated the house, they may jump at the chance to get it over with sooner. Even if they haven’t moved out yet, they may be willing to bump up the closing date if you request it.
Following these five tips can make the whole house-buying process a lot smoother.
Now that you know the ins and outs of buying a home, check out last week’s blog post on getting the best deal on a car.