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10 Must Read Tips for Home Buyers

By Veronica Nguyen · Mar 17, 2015 · Real Estate

10 Must Read Tips for Home Buyers

Image courtesy of Flickr, Porsche Brosseau

Whether you are a first time or experienced home buyer, these 10 must read tips will ensure you are better prepared before you begin your search for a new home.

1. Know How Much House You Can Afford

One of the best things to do before buying a home is to know exactly how much of a home you can afford. You don't want to waste your time finding a home, falling in love with it and sharing it with your loved ones, only to find out in the end that you won't be able to afford it and secure the financing you need to buy it. Instead, it is better to take a proactive approach and have a realistic budget in place before you begin your search.

Find out how much you can afford by using this Mortgage Affordability Calculator

2. Make a Wish List for Your Must-Haves

We all have different preference when it comes to the type of home we'd like to live in. You may want a home with a big kitchen, a walk-in closet, a big back yard, or a big bath tub and shower. Take the time to think about a list of what you must have in your new home and share this with your real estate agent. Then, think about which items you're willing to give up in exchange for something else.

For example, you may have to give up a big backyard to be able to buy home in your desired school district. Or you may have to choose a home with smaller bedrooms in order to be closer to the beach. Knowing what you want and being flexible will make the buying process easier.

Use this Homebuyers Wish List to help you get started in writing your must-haves.

3. Determine What Style and Type of Home You Want

After making your list of must haves, think about the style and type of home you want. For example, do you want a single family residence with its own backyard or a condo where you don't have to worry about maintenance? Perhaps you want a town home which has the look and feel of a house but the maintenance benefits of a condo. You may also be the type of person who loves historical or colonial homes.

Refer to this list of different styles of homes to help you get an idea of what you may want.

4. Get a Pre-Approval for a Home Loan First

Getting pre-approved will save time and show your real estate agent and the sellers that you are a serious buyer. When initiating the pre-approval process your lender will take your application, review your credit report, and request various documents from you before making a decision. Once you have been pre-approved for a loan, you will be able to request a pre-approval letter from the lender to include in your purchase offers. This letter proves to sellers that you have initiated and completed the first stages in the home loan process. Many buyers don't do this before making an offer. By getting pre-approved, you will stand out from the crowd.

Use the BeSmartee Ultimate Mortgage Guide to learn about the mortgage process, take a few fun quizzes and earn up to a $500 credit for your home appraisal.

5. Avoid Major Purchases During the Home Loan Process

You can significantly hurt your ability to get a home loan by making large purchases before the loan process is complete, such as financing a new car. This new financial obligation will have a negative effect on your Debt to Income Ratio (DTI). Hold off on making large purchases until you have completed the home buying process. Before making any final decisions on major purchases, speak with your real estate agent or lender to make sure this decision will not hurt your chances of getting approved for a home loan.

6. Compare Lenders

It's good practice to shop around with a few different lenders for rates and programs before making a final decision. Make sure lenders are being transparent about their fees. Often lenders will advertise some fees, but not disclose others. The truth is, there are more fees in your closing costs than some lenders are willing to disclose over the phone or in person. Keep in mind that, by law, your lender will have to provide you certain documents accurately disclosing all of your closing costs within 3 days of taking your application.

7. Hire an Experienced Real Estate Agent

With so many active real estate agents you can choose from, make sure you find someone that is familiar with your desired area and has the expertise to get the job done. Ask for a referral to a good agent. Interview several of them over the phone or in person before deciding who to go with.

One good source to find a real estate agent nearby is

8. Don't Move Money Around

When you're in the process of buying a home, don't give the lender a reason to question your financial behavior. Avoid transferring money between financial institutions during the home loan process. Remember, the lender will review your financial behavior in the beginning and before they fund your loan. If they are uncomfortable with the transactions they see, they will stop the process and request proof and letters of explanations for why this financial behavior is taking place. Don't give them a reason to delay your closing process.

9. Have Your Documents Ready

A lender will typically ask you to submit copies of W-2s, 2 years of income tax returns, pay check stubs and bank statements in the beginning of your loan process. Prepare copies of these documents, and others, before you begin. Being prepared will help your lender quickly approve your loan and lock in a good interest rate and program. If the lender is missing something and requests copies from you, be sure to provide it to them as soon as possible to avoid delays.

10. Prepare Your Credit Report

Getting your credit report in order before searching for a home will help you to avoid the unexpected. Lenders put a lot of weight on your finances and your credit scores. Be sure to know what your credit score is and what information is included in your credit report. Call and work with the 3 credit bureaus if you see inaccuracies which needs to be corrected. Your goal is to remove any errors on your credit report and raise the scores if possible, before applying for a loan.

For some great tips on how to improve your credit, refer to our "14 Ways to Improve Your Credit Score to Qualify for a Mortgage" article.

Searching for the perfect home can feel like a tiring process. With so many loan options, real estate agents and homes available, it is a wonder how it all comes together in the end. By implementing our 10 Must Read Tips for Home Buyers, you will be better prepared to find and buy your next home.

Add to this list and share additional tips in the comments below.

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