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January 22nd, 2011

Preparing to buy: Do’s and don’ts for your home purchase

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iStock_Mortgage and KeysEven though we’re still a few months away from the busiest homebuying season of the year, if you’re thinking about buying a home in 2011, it’s time to start preparing a list of do’s and don’ts.

Do: Check Your Credit

Many credit reports contain erroneous data. If one exists, it can lower your credit score and cost you thousands of dollars, or even keep you from getting a loan. Check out Fannie Mae’s Loan Level Pricing Adjustment matrix. A mortgage with a 679 FICO score can cost a full point more than the same loan with a 680 score. That’s an extra $3,000 for a $300,000 loan. You can get your credit report for free from www.annualcreditreport.com, and pay the nominal fee to get your credit score as well. Your score will give you a better idea of how mortgage lenders will evaluate you, and you may be able to correct errors and raise your score a few points before applying for your home loan.

Do: Use a Mortgage Calculator

Your lender can tell you how much home you qualify to buy, but only you know what payment you can comfortably afford. It’s rarely a good idea to leverage your income to the maximum since it leaves no room for error or any change in plans or income stream. A comfortable payment, rather than a maximum one, might allow you to cut your income, go back to school, start a family, retire early or keep taking expensive vacations. A mortgage calculator can show you how a comfortable payment translates to a home purchase price. Then, you can refine your search to affordable properties that won’t break your budget.

Don’t: Give Everyone Your Social Security Number

Once you have your credit scores, give that information to lenders when shopping for a loan. There is no reason to provide personal data like Social Security numbers until you decide on a lender. There’s no reason to compromise your identity, and having your credit report pulled indiscriminately by loads of lenders over several weeks can drop your scores (and cost you money!).

Don’t: Cave In to Pressure

Finally, don’t sign anything you don’t understand or feel uncomfortable with. Don’t let a real estate agent, lender or anyone else who stands to make money from your purchase push you into anything. It’s you who will be living in and paying for that home for a long time to come.

Click here for more homebuying do’s and don’ts. Got a homebuying question? Leave us a comment below and we’ll be sure to answer you.

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3 Responses to “Preparing to buy: Do’s and don’ts for your home purchase”

  1. Video Don'ts for Real Estate - Planning the shot | Web and Video Design Says: January 25th, 2011 at 11:21 am

    [...] Preparing to buy: Do’s and don’ts for your home purchase (hsh.com) [...]

  2. 3 Don’ts of Purchasing a Home | Danny Amberson Says: March 18th, 2011 at 3:58 pm

    [...] HSH.com Photo credit: stock.xchng Filed Under: For Buyers Tagged With: buy home columbus georgia, buy [...]

  3. Mela Says: June 23rd, 2011 at 5:39 am

    Here is a link of a free apps for free Mortgage calcualtor http://itunes.apple.com/us/app/investment-property-valuator/id421059096?mt=8 or http://www.ipvcalculator.com/. Check it out, it’s free before you buy a house.

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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