You're anxious to start looking for your dream home but wait, there are a few things you should consider before you start burning up yours and your real estate agent's time.
1. Think Long Term – Ask yourself some questions:
- How long do you want to stay in the home?
- Will this be a first home for just yourself or a young family or do you plan to raise the kids here? Raising your kids in this home will require schools, parks and recreation, after school programs, etc.
- What features are most important to you…a large yard, a home office, a pool, home owners' association?
These questions can help you determine what kind of home you´ll be looking for and the type of mortgage and terms will be best.
2. When Can You Move – When is your lease term up? Are you permitted to sublet? Is there a penalty for early lease termination?
3. Talk To A Lender or Mortgage Broker – Get preapproved for a mortgage before you start looking. You might be surprised at the advantages a preapproval letter can provide.
You will be able to:
- Save time by looking only at homes you have the funds for,
- Increase your negotiating capability by giving the seller the reassurance of a preapproval letter along with your offer, * Reduce any last-minute surprises that might disqualify you and dash your dreams,
- Enjoy a shorter closing period because the loan application has already been processed.
Terminology
Preapproval indicates that a borrower's credit, references and employment have been verified.
Prequalification is based on the opinion of a loan officer and implies a person is creditworthy but that nothing has yet been verified.
Mortgage Brokers have a large selection of lenders to scrutinize so that they can bring borrowers and lenders together to find the best financing options and loan programs possible.
Lease Termination Penalties can be as much as the balance of rent the landlord could lose if unable to rent the home again, i.e. if you have a 12 month lease term but decide to leave after 6 months the penalty could be the amount of six months rent.
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