The issue with financing anything is we are all programmed to find the thing we want to buy first and then figure out the financing. We find the car we want and then sit down with the finance manager at the car lot. I am sure most of us got our Target card because we had a full cart and the cashier offered us 10% off the purchase if we signed up. Unfortunately this is how most people finance their home as well.
But taking just one week to carefully go through options and review your entire financial picture could save you thousands at close and hundreds a month in cost and will ensure a much smoother home buying process.
1. Complete An Application With A Home Lender
I know this seems like the obvious thing I would say because I am a home lender, but having your credit, income, and assets reviewed as early in the home buying process as possible helps make home buying a lot less stressful. It could also save you thousands in fees and interest.
2. Get The Assets Needed For The Purchase In Your Bank Account
About 90% of the time assets are what delay a closing. All of your cash to close needed to purchase a home must be verified in your bank account at least two weeks before closing (earlier is better). Where issues come up is when funds have to be moved out of a non-liquid account (IE 401k, IRA, stock) or funds are a gift from a relative and these steps are taken after a buyer has a signed contract. All lenders will have to paper trail these funds and if there is a delay in the transfer or issues with the gift during the loan process this can delay a closing. To prevent this, I recommend getting all funds in your account prior to making an offer.
3. Have A Buyer’s Consultation With An Agent
Most buyers call an agent when they see the house they want and this make sense. The buyer just wants in the house and they need the agent to open the door. However, sitting down with your agent to go over what type of home you are looking for, what your expectations are of the agent, and what the agent needs you to do to start looking for homes will help both of you with the home buying experience. I like to call all of this “front loading the work”. Do the work upfront so you are not stressed and scrambling when you finally see your dream home.
4. Review All Of Your Finances
A home loan is basically a complete audit of your finances, debts, income, and assets. Since we are already going through all of your financial history, let’s take this time to review your entire financial situation. How long has it been since you shopped for car insurance? You will be purchasing homeowner’s insurance so now is an excellent time to review your car loan. Let’s look at your credit and see if there is something that can be done to improve your credit scores. A lot of buyers have several 401ks from previous jobs. While we are reviewing your assets, let’s contact a financial adviser and see if we can consolidate them into a higher return investment.
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