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Buying a Home Doesn't Have to be Spooky

Buying a Home Doesn't Have to be Spooky

Home Financing

10/31/2018

4 min. read

By: FCU Team

Buying a home can be a daunting task, between the approval process, the potentially overwhelming idea of a lifelong investment, and not to mention the home shopping process itself. It can be a scary experience, to say the least. However, with the right knowledge, and preparation, it doesn’t have to be. At Florida Credit Union, we work with local realtors and vendors to ensure the process is a dream from start to finish. Since we have over 60 years of experience, we want to better equip you for what could be one of the biggest decisions of your life!

Check out these 5 tips below to ensure your home buying experience isn’t a nightmare!

Know Your Credit Beforehand, and Know What You’re Shopping For

Going into the home buying process without some knowledge of your credit score and credit history can set you up for a few surprises and maybe even a disappointing experience. This is why it’s a good idea to get a pre-approval or pre-qualification, before you start shopping.

The difference between a pre-approval and prequalification:

Pre-Approval: Lender verified information and documentation to determine how much they can lend borrower.
Pre-qualification: Lender estimates how much the borrower qualifies for based off of information provided by the borrower.

One of the best parts of a preapproval is the opportunity to review your credit report so you can set realistic expectations for what you will be shopping for. If you know that you may have some challenging credit history, get started early. Review your credit score early on, before you’re actually in the market for a home. Florida Credit Union offers a free credit score enhancement analysis at all 11 of our locations. An analysis of your credit report could reveal areas that could use some improvement and give you time to address those areas before you even apply.

According to Bankrate.com, there are two other reasons you’ll want to get that pre-approval before getting to the fun part:

The market is competitive

Since some home shoppers put this part off until the end of the home buying process this could be the difference between you and other interested parties

No pre-approval could mean rejected offers

Some sellers wont even consider offers from interested buyers without a preapproval that includes, bank statements, tax returns, lender verification and credit checks.

What you’ll need to get started:

Pay stubs
W-2s (last two years)
Last two federal tax returns.
bank statements of all types of accounts (2 months will typically do)
Your credit report.

Know What Type of Mortgage You Need

You may think that it goes without saying, but it’s important to know what kind of mortgage you’ll need. Mortgages, like the home you’re shopping for, are not one size fits all. Florida Credit Union offers a wide array of mortage types, terms and rates to make sure your dream home comes with a dream mortgage as well.

Know All Costs Beforehand

When starting the home-shopping journey it can be easy to get wrapped up in the more exciting aspects of the process and leave the boring stuff for the end. Shiplap and subway tile are much more exciting than paperwork, we know. However, putting off the mundane tasks could come back to haunt you.

Shoppers usually keep the one-time costs in mind, like moving expenses, closing costs, and inspections. However, there are plenty more costs associated with your new home. Recurring expenses like insurance, property taxes, and HOA could run you thousands of dollars. So, when shopping and budgeting for your new home, keep these additional fees in mind. If you’re shopping in a hotspot, remember that, chances are, you won’t be the only interested buyer. If you can’t be the only option, be prepared to be the best option.

Don’t Skip the Inspections

While a lender will require you to have the home appraised to make sure they’re lending on par with the home’s value, they will not require an inspection. These are for your benefit, only. If you decide to go through with an inspection, which we highly recommend, keep in mind that it doesn’t cover everything. A general inspection will include the condition of the home’s foundation, walls, ceilings, floors, windows and doors; air and heating systems; interior plumbing and electrical systems; the roof, attic and visible insulation.

Even with all of the above being covered there are still some areas of the home, that are worthy of professional examination. Outside plumbing, asbestos, gases and chemicals are just a few things that aren’t included in the general inspection that you’ll want to check for. Some other items you may want to be familiar with are:

Knowing the condition of the home,
Verifying square footage
Lot size and property boundaries
City permits and zoning

Don't Try To Be a "Killer" Negotiator

Everyone likes a good deal, really, EVERYONE. But, be sure that you’re picking your battles wisely when it comes to negotiating the price of your new home. Its commonplace to come in at a lower price than the sellers asking price, but it is vital that you carefully consider the offer you submit as to avoid offending the seller.

If you find a home you love, and you’re convinced that it’s a "perfect fit", don’t hesitiate to negotiate, but do so fairly and wisely. Consider this…negotiating a difference of $2,000, works out to a $5.55 difference EACH MONTH (for a 30 year mtg). Most Americans spend that for their daily coffee. Don’t lose your dream home over pennies!

Fight the Feeling!

A little buyer’s remorse is inevitable and will usually pass. Buying a home, especially for the first time, is a big commitment, but it also yields big benefits! Don't get so caught up in a guilt trip that you fail to enjoy your moment! You've worked hard for this, now reap the benefits (especially if you're getting a tax break!).