Home Preparation

In order to buy a home, potential home buyers must prepare themselves for the tremendous financial investment they are about to make. This preparation needs to begin months before the property search actually gets underway. The very first thing to do is to get rid of as much debt as possible. Some debt, like student loans and automobile loans, are difficult to pay down quickly. Other debts, like credit card bills, are easier to pay down. Carrying less debt is advantageous for several reasons. It lowers the debt ratio, which lenders look at when approving loan applications. The debt ratio is essentially the percentage of one's income that goes to pay off all debts, including a mortgage loan. Less debt going in to purchasing a home means that a buyer may borrow more money to buy the home. Less debt improves credit scores as well, so that buyers can get better interest rates.
Once debt has been ironed out it is time to start gathering any and all financial records. Buyers should be prepared to prove how much they earn and the cash available on hand to a lender. This can include everything from pay stubs to stock portfolio information. Some of this information might be required by a lender prior to getting a preapproval letter, and some of it might be needed later on in the process. Regardless of when it is needed, it is best to have the information on hand. 

Buyers should seek preapproval for a mortgage loan before viewing properties. This gives buyers and their real estate agents an idea of the price range they should be searching in. Also, with the market developing like it is this year, being preapproved allows buyers to make an offer on their dream home immediately. The best homes are selling quickly, and it is completely possible that buers end up desperately trying to get a preapproval letter. Meanwhile, a more prepared buyer submits an offer and has it accepted. It is also important to note that a preapproval letter does not tie a buyer to the lender that issued it. Buyers can still go out and shop for a better deal!

Buying a home is the biggest investment that most people make in their lifetimes. When so much is at stake, it is essential to be properly prepared. If you have any real estate- related questions, feel free to contact me at ryan.guilmartin@gmail.com or 617-852-0040. Happy house hunting!