Taking steps at the beginning of your property search helps buyers (1) identify the types of properties to search out, (2) act quickly after finding the right property, (3) seem more appealing to sellers, and (4) avoid stress later in the process. We recommend you take the following steps:
Collect the Necessary Financial Documents
To secure financing for your property, lenders will require a broad range of documentation. We recommend you begin this process by collecting documentation regarding your:
- Financial statements
- Bank accounts
- Investments
- Credit cards
- Auto loans
- Recent pay stubs
- Tax returns for two years
- Copies of leases for investment properties, and
- 401K statements, life insurance, stocks, bonds, and mutual account information.
Even for cash deals, some documentation will be required. Most notably, bank statements evidencing proof of funds are commonly requested.
Find a Lender
Selecting the right lender is a key factor for a smooth real estate transaction. Interest rates are obviously important, but they are not the only factor. You should also identify lenders that are responsive and who deliver as promised. As your Realtors, we can assist you in identifying quality lenders.
Know Your Credit Rating
Your credit score has a huge impact on what type of property you can buy and at what price. Your lender will research your credit ratings from three credit reporting agencies: Equifax, Experian, and Trans Union. Your score will then factor into the interest rates you are offered.
Please note that requesting your credit score can actually lower your credit score. For this reason, we do not recommend that buyers request their ratings on their own prior to engaging a lender. We will be happy to recommend experienced, knowledgeable lenders in the residential, construction, commercial, and investment real estate fields.
Be Careful With Your Finances
Sudden career changes or large purchases during the purchase process can derail your financing. Purchasing a new car, for instance, affects your credit score and could be deemed to limit your ability to repay a home loan. At a minimum, such actions will likely cause a delay as the lender must rework the numbers. It is important to approach your property purchase from a position of financial stability.
Clarify Your Goals
Considering early on the areas in which you want to live, the type of property you want, and what “must haves” you require can save a lot of time in your real estate search. For example, do you want to live in the city, the suburbs, or more rural areas? If your answer is the city, do you want a high-rise condo, a townhome, or a single family home within the city limits? If it is the suburbs, what areas are you considering? What neighborhoods do you like, and what size lot do you want? How many bedrooms and baths do you need, and do you need a home office? Developing a clear picture of your desired purchase will assist your agent in finding that property for you and save you time along the way.