1.If I could give one piece of advice to homebuyers it would be to stick to your price range and the best way to do this is to be pre approved for a loan. By obtaining a pre approval letter you will know the exact amount that your lender is willing to loan you. This makes it pretty easy to create a price range that you are wanting to spend on your home. The issue buyers face is when they start to throw caution to the wind regarding their price range since things tend to start to spiral out of control if you do not have a real estate agent that will put you back in line. When buyers start to look outside of their price range they tend to fall in love with a home over budget and so every home that they look at after this dream home in their price range will not seem as wonderful as this other home.
Curious as to the difference between pre qualification and pre approval? The difference is that a pre-qualification is an approximation on what your loan can be compared to a pre-approval which is stating that based on an underwriter’s review of your financial information your loan is only contingent on the appraisal of the property (unless something changes with your financials before closing).
2.No matter if we are in a buyers or sellers market, submitting a lowball offer is something to really think about before submitting. When you submit a lowball offer, you are taking a risk that you might come across a seller that is offended by your lowball offer and will not come back with a counteroffer. On the other hand though you could have a seller come back with a counteroffer and due to your lowball offer you’re in a great position. But, are you ready to loose out on the home you want because you are trying to play hard ball? If you can safely say that you are fine with not getting the home then go for the lowball offer. I do recommend that before submitting a lowball offer that you speak with your real estate agent to go over the different outcomes that could come from the offer.
3. Earlier I talked about how a pre-approval is only contingent upon the appraisal of the property unless your finances change, well I will explain this buyer blunder a little more in-depth. During the pre-approval process underwriters are going to review all of your financial information to include your bank statements, salary, assets, pay stubs, credit report and obligations. This is how they decide on the loan amount that you are approved for; so if you decide to go out and make a big purchase, let’s say a new car, you might be risking the purchase of your home. Lenders can run a last minute credit check and if they notice that you just spent a large amount on something, you might just have jeopardized your mortgage approval.
4. When purchasing a home, buyers sometimes forget that you need more than just your down payment to close; you also will need at the close of escrow money for closing costs. You can expect to pay between 2%-7% of the purchase price in closing costs. To get a better ballpark of what your closing costs will be speak with lender.