Adventures in house hunting
Before your eyes glaze over and you head for the birdcage with this column, I promise to go through the process step by step, and in language that will be recognizable as English.
Each week we’ll tackle another topic, so when you get ready to make the big step ” whether you’ve bought (and sold) 50 homes or you’re a first-time homebuyer ” you’ll be more confident when you walk away from your next closing, and you won’t be lying awake at night wondering, “What have I done?”
We’ll cover such topics as how much house you can afford, should you prequalify online, how to choose a home, how to make the offer, some house-hunting tips, plus many others. I’m also open to suggestions for topics from readers.
So, let’s begin with the topic that’s as much fun as a trip to the proctologist: financing.
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Simply put, it’s how much you can borrow, or how much you want to borrow, how long you have to pay the loan off, and how much it will cost you, i.e., the interest rate and closing costs.
When I counsel buyers, financing is a subject I avoid, probably because when I received my real estate license 10 years ago, the Colorado Real Estate Commission made me promise that all I would “practice” is real estate. I wouldn’t do loans, inspect homes or test wells.
However, I can give you a general overview to get you going in the right direction.
You absolutely must begin your search with a loan officer at the bank or with a mortgage broker.
I know, I know ” you drive by something that gets the heart thumping and you just have to see it. We’ve all been there. It only takes an hour or so for a lender to narrow down your price range so you will know if you can afford a 500-acre ranch south of Rifle or the little bungalow down the street.
Your credit rating plays an important part, as does your income. What about a down payment? Do you need thousands of dollars tucked away in a savings account or equity in your current home before you can buy?
The short answer is “no.” There are literally hundreds of loan programs available, and it is even possible to get free down payment assistance from the government, a “gift” from a family member or use funds from a 401k. There are even loans that are 0 percent down.
That’s why it’s important to see a lender first. They can help you decide what is best for you and your particular situation.
When looking for a lender, choose someone local if possible. It’s much easier to get help, to get answers from a real, live person. (I’ll talk later in another column about the dangers of applying online.)
It’s also much easier for you and your Realtor to track the progress of your loan. This is very important in regards to the performance dates in your purchase contract.
If you don’t have a relationship with a lender or are intimidated by where to start, call your Realtor. They should have a good working relationship with two or three lenders, and can point you in the right direction.
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