1. Before You Start To House Shop, Get Pre-approval.
There is a big difference between pre-qualification and pre-approval. Most homeowners don’t realize that there is a difference, and the difference may cost you your dream house.
Pre-qualification does not guarantee you a loan. It merely establishes how much you are capable of paying for a house.
To get loan pre approval, a lender will inspect your credit and financial situation in detail. This process guarantees you a specific loan amount. It also determines your monthly payment amount.
After concluding the pre-qualification process, you will have a better chance of getting pre-approved status. This is what you need to do:
First, calculate your complete gross income. This includes all interest payments, bonuses, salaries, interest, tips, and dividends.
Next, you need to determine your total monthly debt. This includes time payments, car payments, alimony, insurance, child support, regular savings, and other loans that you are paying.
After determining your total gross income and total monthly debts, you’ll insert the appropriate percentages a lender would use. A common percentage is 28/36. Percentages will vary between lenders. 28/36 means that you will need take you gross monthly income and multiply it by 28 percent. This gives lenders an estimate on how much you can spend on a monthly house payment. This estimate includes insurance and tax.
After that, take your gross monthly income and multiply it by 36 percent. Other than your mortgage, this is an estimate on how much you can spend on paying off your debts.
Finally, you will to subtract your real monthly debt from your maximum monthly debt. This amount more closely represents how much you can actually spend on house payments.
This amount is only an estimate. It can give you a good idea where you stand, but isn’t a definite amount. Once you get this figure, talk to a lender about the options available to you.
2. Shop Around
All loans are different. Fees and rates vary depending on the lender and you own financial situation. Look around. Find a lender that’s right for you. Ask friends and family for recommendations. Mike Kravitz can also help you. Talk with a few lenders. Make sure you get all the information about what services they offer and the fees associated with them. You’ll also want to make sure you’re getting a decent interest rate, however don’t sacrifice a good rate for bad service and high fees.
3. How’s your credit look?
Double check your credit report. This report can weigh heavy on the approval of your loan. Make sure it is free of errors. It’s good to identify and fix any problems before you talk to lenders. You can get a hold of your credit report by contacting one of these major credit bureaus: Trans Union 800-888-4213, Experian 888-682-7654, and Equifax 800-685-1111.
4. Think about a Buyer’s Agent
Your ideal real estate partner is someone who is working totally in your interest. You want someone to assist you in buying the absolute best home for you at the lowest price you can negotiate . You don’t want someone who’s trying to sell you just any property in your price range. Remember, you’re buying your Chicago home.
In a real estate transaction, Mike Kravitz is required by law to act in your interest as the buyer.
In general, a buyer’s agent can provide you with additional information about the property as well as the seller. Your Chicago real estate agent is meant too be objective to the positives and negatives of the property than seller or his representation.
Ask if there are any restrictions of various types of representation as well as what services are included. Normally, the buyer’s agent commission is taken care of by the seller.
5. Be Aware Of Resale Value
Resale value isn’t just determined by the condition of the house, but the surrounding areas as well . Be conscious of what features add or take away from a home’s value. You agent can help locate these things in and around the home that will affect the resale value. One example of this would be if a majority of the homes sit on a large plot of land, it might not be such a good idea to pick the house that crammed onto its lot.
6. Take Plenty of Good Notes
You are not going to be able to keep it all straight “in your head”. Which house had the enclosed patio? Where was the house with the really large master bedroom? It’s a good idea to keep detailed notes on each home’s features. There’s no way you’ll remember everything about every home you look at. Make up a checklist for the home and neighborhood. Bring it to every home you look at. This will help later when you’re comparing homes to each other.
7. Thinking About A Fixer-Upper?
The price is right, but the place needs a little work. When you close your eyes, you can picture how great the place will look when it’s done. The only problem is that it’s not done. Can you fix it yourself or will you hire professionals? If you do it yourself, make sure you have the knowledge and ability to accomplish the tasks at hand. If the repairs are out of your league, how much will you be willing to pay to get them fixed? Add this in to your estimates and make sure it’s really worth it. Bring by an architect or engineer before you make an offer. Be sure that you know what you’re getting in to.
8. Is It Necessary To Have A Home Inspection?
Yes. Old or new, a professional home inspection is something we thoroughly recommend. The seller doesn’t necessarily know about every flaw or problem in the home. An inspection can help catch them. In new constructions, a home inspection can locate such flaws as missing insulation, errors in drywall installation, incorrect elevations, incorrect materials used, or defective tile installation.
Don’t have a friend or family member with some experience look over the house for them. If the person is not a professional, there are some serious problems that they can overlook. Down the road, these problems can grow, causing you to spend even more time and money to get them fixed.
Get some recommendations and talk to a few inspectors. Make sure that the inspector is a member of professional organization. When you settle on an inspector, get cost estimates and the scope of service in writing . It’s a good idea to be present when the inspector views the home. You can gain valuable information about the nature of the maintenance that the home will need.
9. Be Smart About Negotiating
You’ve finally decided on the perfect house. Now it’s time to start negotiations. This is the time when it’s crucial that you have the right agent. Trust Mike Kravitz. He will lead you through the negotiations.
In your first offer, leave room to negotiate.
Up front, determine where you will start and, after counter offers, where you want to end.
Consider the following as you write your offer:
- the prices of similar homes in the surrounding area
- the prices of other homes on the block
- the condition of the property – what, if any, upgrades or work needed to be done
- the motivation of the seller?
Your offer will include:
- the down payment, if any
- the financing details; note that you have pre-approval
- the closing costs and who pays what
- the determination of who pays what, if an inspection is conducted
- the disclosure of defects by seller and repairs that will be made
- the timetable for purchase and the date of possession
- the contingencies/cancel clauses to protect the buyer and seller
- the guarantees on the condition of the property at time of sale
- the date for the closing
Most likely, you will make a counter offer, if your initial offer is turned down. Make sure you put all counter offers in writing. Talk to Mike Kravitz about the best course of action during the negations. If you and the seller can’t seem to reach an agreement, it might be best to peruse a different property.