Improve Your House-Hunting Skills

Your Rights As a Home Buyer or Seller PDF File
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If you're having difficulty finding a home to buy, here are four ways to maximize your opportunities:

1. Make sure that you and your agent are on the same page.

Share your wish list with your agent. It's a good idea to visit at least several homes with your agent initially to make sure that you and your agent agree on what it is that you want. Be honest, your agent cannot help you if you are holding anything back. Realtors really enjoy helping their clients find that perfect property. They're also the people who know the area and market the best.

2. Look at every listing that might work for you.

This is how you learn the idiosyncrasies of the local housing market. After you look for a while, you may find that your wish list is too restrictive. You'll have to compromise no matter what or where you buy. But, before you can decide how you'll be willing to compromise, you need to know what your options are.

For instance, you may ideally want a three-car garage. After looking, you discover you'll be lucky to find a two-car garage in the township where you hope to live. So, you will need to make a choice. Either you drop the requirement for a three-car garage, or you start looking in townships where three-car garages are available. Be sure to let your agent know if you make changes to your wish list.

3. Broaden your search to increase your options.

You might consider more than one town or area. The broader your options, the more listings you'll see and the less frustrated you'll become.

4. Finally, get preapproved from your lender.

Sellers often prefer to negotiate with pre-approved buyers because the sellers know such buyers are financially qualified to obtain the financing they need to close the transaction. A pre-approval letter is an especially favorable point in a close multiple offer situation and, you might feel more confident about making an offer with a pre-approval letter in hand and the knowledge that you'll be able to close the deal.

A pre-approval letter is more reliable than a pre-qualification letter.

Getting a pre-qualification letter is easy. You just call a mortgage broker or lender, provide some basic financial information, and then wait a few minutes for the letter to come through your fax machine. "Pre-approval" means you have met with a loan officer, your credit files have been reviewed and the loan officer believes you can readily qualify for a given loan amount with one or more specific mortgage programs. Based on this information, the lender will provide a pre-approval letter, which shows your borrowing power. You can visit as many lenders as you like and get several preapprovals, but keep in mind that each one carries with it a new credit check, which will show up on future credit reports and possibly lower your credit score a few points each time.

Although not a final loan commitment, the pre-approval letter can be shown to listing brokers when bidding on a home. It demonstrates your financial strength and shows that you have the ability to go through with a purchase. This information is important to owners since they do not want to accept an offer that is likely to fail because financing cannot be obtained.

The additional due diligence is exactly why the pre-approval carries more weight.

You'll know how much money you can qualify to borrow.

Most home buyers have a rough idea of how much they would feel comfortable paying every month on their mortgage. However, there's no quick-and-dirty way to translate that monthly payment into a specific maximum mortgage amount because other factors, down payment percentage, mortgage insurance, property taxes, adjustable interest rates and so on are part of the calculation. And, you might not be qualified to borrow as much as you think you should be able to borrow, depending on your income, your debts and your credit history.

A few reminders.

Pre-approval letters aren't binding on the lender, are subject to an appraisal of the home you want to purchase and are time-sensitive. If your financial situation changes (e.g., you lose your job, lease a car or run up credit-card bills), interest rates rise or a specified expiration date passes, the lender will review your situation and recalculate your maximum mortgage amount accordingly. Lastly, like many home buyers, finding the right lender is just as important as to finding the perfect property. If your lender turns you down, don't give up, go to another until you find one who will lend on your terms. If you're still having problems don't be afraid to ask your agent for a list of well qualified lenders who know the market and will get the job done.

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Listing information provided by the Greater Northwoods MLS.

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