Home Buying 101-The back story
You've decided it’s time for a change. You found yourself wanting to buy an investment property. You've fallen in love with a “dream home” and you no longer want to rent. No matter how you've found yourself looking to purchase a property, you do know one thing: You want to do it right.
Here are 4 tips from the Pros:
1. A Pre Qualification is often not worth the paper it’s written on, be prepared & get Pre Approved: Your mortgage broker needs to spend the time determining your credit, income, assets, and liabilities that will come into play when you purchase the home. Anything short of that is guess work, and quite frankly, unacceptable when your deposit is on the line.
2. Remember there are tax benefits to owning a home, but they do have their drawbacks: The mortgage interest deduction allows you to claim a tax deduction for qualifying interest paid during the year. The biggest advantage to the mortgage interest deduction is that it can reduce your income by the amount of interest paid on the first $1 million -- or $500,000 if you're married & filing separately -- of home acquisition debt you pay each year. However, to receive this tax deduction, you must itemize on your taxes. It’s always wise to speak with your accountant or tax adviser before finalizing any large acquisition.
3. Ask the right questions: Whether you’re at an open house, discussing closing costs, or choosing upgrades, you need information. Make sure to ask as many questions as you can. Your Realtors are experts in their market area. We are experts at financing. Don’t be afraid to ask about the neighborhood, condo association, appraisal fees, and anything else that could affect you. If you have the right team, there will be no mysteries.
4. Be careful with your credit: Inquiries hurt your credit score; try not to apply for too much credit leading up to your home loan application. If you choose to rate shop, keep in mind the shopping window (a time frame where inquiries of the same nature impact the score less) is only about 1-2 weeks. Also, minimize the time wasted & possible inquires by ruling out lenders with high closing costs or the inability to offer the terms you want. Finally, once you've applied for a mortgage, do not obtain new debt. Any changes to income or debt can change your approval, cause delays, or impact the final loan amount.