Buying a home is both exciting and scary, especially if it’s your first house. If you’re like most people, the first thing you fantasize about doing is browsing the internet for homes in your area and setting appointments to tour your favorites. In reality, the home buying process shouldn’t start there. If you want a stress-free experience, you need to take a few steps back and follow these tips first — especially if your home will also be your office.
Get Your Credit In Check
Let’s say you’re hoping to buy in Rancho Santa Fe. Before you start looking at the many Rancho Santa real estate options available, you need to make sure your credit is on point. Most likely, you’ll need to finance at least a portion of your new home and it’s really hard to obtain a mortgage if you have less-than-stellar credit.
This is even more important for people who run home businesses or are self-employed. Since you don’t receive a regular paycheck, the lender may put more emphasis on your credit score when determining your loan eligibility. Also, keep in mind, self-employed individuals or home business owners need to provide several years worth of tax documentation when applying for a loan.
First, order your credit report and score from all three major credit bureaus — Experian, Equifax, and TransUnion. You should also check your FICO score. It’s similar to a credit score, but the score range is different. You want to make sure both your credit scores and your FICO score are as high as possible because you don’t know which scores the lender is reviewing.
If you don’t have credit or your credit isn’t really that great, you should consider working to improve your credit score before you start the home buying process. This way, when you are approved for a home loan, you get the lowest interest rate possible. This also is beneficial if your business is fairly new because it gives you more time to track your monthly and annual income before discussing options with the bank.
Get Pre-Approved for Your Mortgage
One home buying tip that’s often overlooked is obtaining pre-approval for a mortgage. You should apply for mortgage pre-approval before you start looking at homes. When mortgage companies approve buyers, they give you a maximum pre-approval amount. This means if you purchase a house that costs more than your pre-approval amount, you’d need to have the additional cash on hand to cover the difference as well as the money you’ll need for your down payment and closing costs.
If you don’t have a good amount of excess cash available, knowing your maximum loan amount can save you a lot of time. You simply show the pre-approval letter to your real estate agent and he or she will show you houses at or below that cost.
Hire a Buyer’s Agent
Did you know there are real estate agents who focus on selling homes and agents who work exclusively with buyers? They are called buyer’s agents, and their entire job is to make sure you’re getting the best possible deal.
It’s important to remember here that the agent listed to sell the house is focused on selling the house. Now, this doesn’t mean you shouldn’t work with him or her. Agents who are selling a home are still professional and knowledgeable. They probably know more about the house than a buyer’s agent would. However, it’s always important to have someone whose interest is focused on your best interests when making a large purchase, especially when you need your home to function as both your house and office, which is why this is one of the most important home buying tips you can follow.
Plan for your Future Personal and Business Needs
It’s easy to make a list of all the amenities you need a home to have currently, but you also need to consider how your lifestyle or business needs will change in the future. For example, if you plan to have children in the future, you might not want to look at one-bedroom condos. Ideally, the home you choose should grow with you and your family. Or you plan to scale your home business to a point where you might want to hire an assistant to work with you. In this case, instead of choosing a home with enough space for an office, you might consider choosing a home that has a finished basement that can be used as individual office space and a co-working space.
Ultimately, the best thing you can do when buying a house is to keep an open mind. Unless you’re building a new home, there’s a good chance, you’ll have to make some compromises. When you go into the process with an open mind, it’s a lot easier to see things in a positive light.