4 Things To Think About Before Buying A Home

Have you been considering purchasing a home and wondering where to start? Well your credit score is a good place to start. Most people know that their credit score is a really big deal and can affect lots of aspects of your financial life, but most of us don't really know or understand all of the different factors that affect our credit scores or why, let alone the effect it has on your power to purchase a home. It's also not the "end all be all" to the process of buying a home. Below are 4 important factors we think you should considering before purchasing a home. 

1. Know Your Credit Score

We've all heard it at least once in our life; "Don't let anyone check your credit score unless they absolutely HAVE to". While there is some truth to that, it's not entirely accurate. Yes, if you apply for several different credit cards or apply for multiple loans all around the same time, it can have an effect in dropping your score, however most of us don't do that because there is no need to and the number of points it reduces your score is usually so nominal it won't actually affect anything and will spring back up in just a couple of months. Your credit score, aside from your DTI (Debt to Income) ratio is going to be one of the most important factors in getting prequalified for a home mortgage. Knowing what your credit score is can tell you immediately if you need to wait to build or fix your credit or help you decide which kind of loan you can qualify for. You can check your credit on your own for free once a year. 

2. Find the Right Lender

We're not going to lie, finding a truly good lender (like finding a truly good Realtor) can be a tricky task. Finding a lender that knows their products, has financial management skills and is responsive is the trifecta of a good lender. Let's break that down. The products? What do we mean by this? Well we mean the type of loans. Not all are created equally and often times the one that seems like the best deal in the beginning may not be the ideal product for you and your situation. How can that be? Well a good leader should ask you what your goal is in purchasing. Is this an investment home? Are you looking for your "forever" home or your "stepping stone" home? These matter as the the interest rate, monies due at the close of escrow and many more factors can affect not only your purchasing power, but your bottom line number you feel comfortable paying. Discussing the different products the lender has to offer with their banking institutions will help to answer whether or not they have the financial management skills that you need to make to the right decision, such as how much you need to save, best interest rates,  as well as determining which price point you feel most comfortable purchasing a home at so that you don't find yourself regretting the investment. This all leads to the final consideration which is responsiveness. Having a lender that is responsive and answers your questions becomes infinitely more important once you open escrow. Most escrows (in SoCal) are 30-45 days long. Yes that's a month - month in a half, but there is a lot to get done in that time span and having a lender that communicates well with not only you, but your Realtor will be one of the most crucial factors in having a smooth and successful transaction that closes on time. 

3. Find the Right Realtor

This is also just a tricky as finding the right lender. At the risk of sounding gloaty (that's a word right?), we do truly feel we are great Realtors who wholeheartedly love our careers and clients, but every transaction is as individual as the clients we work with and so even the best Realtors aren't always the right fit with every client. The escrow process alone is 30-45 days and that doesn't count the potential 1,2,3 or more months (if your lucky) it may take to find the home that fits your budget, checks of your needs list and some on the want list, so you have to truly like your Realtor in order for you to have a pleasant experience. Not to mention it's just more fun that way. Now where do you start to look for the right Realtor? Well referrals are always great. The vast majority of clients that we work with are a referrals from other past clients, working with their friends, family, or co-workers. Another option is to pay attention to the Realtors that sell the most homes in the area you are looking to buy (or sell) your home in. This of course may only tell part of the story as there are Realtors who ONLY work with seller's or buyer's, but it's a good start. By now you may have a "short list" of Realtors you are interested in so, how do you narrow it down? Researching each Realtors reviews is a good start. Most websites like Yelp make it virtually impossible to fudge or add reviews manually and while yes, we break the golden rule and ask for reviews, our clients don't HAVE to write them. Review can be very revealing in telling you not only if they liked or disliked their agent, but also what they liked best about their Realtor so you can compare if they have the same qualities you are looking for in a Realtor. The last and most important step is to interview them. Yes, you can interview us to make sure your Realtor is the right fit for the job. Not sure what questions you should be asking your Realtor, click here for a list of questions we encourage our clients to ask us in every interview.

4. Know What You Need vs. What You Want

This is probably the most difficult question for clients to answer and yet it's the most important. Why? Well you've just successfully selected an excellent lender and Realtor whose primary job is to help you stay within budget and make one of the largest investments of your life. In order to do so they need to know very clearly all the things you must have in your home vs. what you ideally want but don't necessarily need. And they need to know it very early on. The biggest mistake many buyers (and some Realtors) make is not having this clearly defined. This becomes a problem when you're shown a home that checks all of the boxes on the needs and wants list but, is WAY out of your price range, location, etc. You've probably heard people say "location, location, location" is everything and in our experience with our clients this is sometimes the most important factor, and in order to keep them in that location, there are some concessions they may have to make on their want list to stay in that location and within budget. This is also a discussion we have in our interview with each of our clients. Setting the expectations for each party is one of the most important factors in building a strong business relationship that results in a smooth, successful, and dare we say exciting and fun process. I mean you are buying a home...how exciting for you!

There are so many factors to consider when you start seriously thinking about buying a home and they can all feel a bit overwhelming so we suggest starting with researching and interviewing a Realtor (hopefully us) as most have built relationships with lenders that they know and trust. We hope this helps guide you some in the process of buying a home, even if that means you've determined that now isn't the right time or that we aren't the right fit for you because ultimately, it's not a matter of what we (or anyone else) wants, it's what you want and need in a Realtor to help you make the best choice for you and your family. Happy House Hunting!