Thinking of Buying a Home? Five Steps to Help You Be Prepared

Interest rates have again hit all-time lows of 4.4% for 30-year and 3.7% for 15-year fixed loans. If you are a buyer thinking of getting off the fence, there are several things you should do to be prepared. You wouldn't think of going on a road trip without preparation, and buying a house is a journey that needs preparation as well.

1. Even if buying a home is way down the road for you, one important thing you should do is keep track of your credit scores. Services that send you monthly reports are well worth it. If there are errors, get them taken care of right away. If there are problems with your score, consult an expert to advise you in improving your numbers.

2. Get pre-approved. Many buyers spend months looking at homes before getting pre-approved. I don't think buyers can make a worse mistake. Don't take the risk of spending time looking in the wrong price range or falling in love with a home you won't be approved for. Once you receive your approval, don't make changes that will affect your qualifications. For example, don't change jobs or make a big purchase. Lenders are now required to re-pull credit report information, and re-verify employment and other information. Any undisclosed debt or change in circumstances could result in a delay or cancellation of your closing.

3. Find an attorney to handle your transaction. An attorney's name is usually included on offers, so don't put yourself in a situation where you have to rush to choose an attorney when you've found a home you want to move on quickly.

4. Research neighborhoods, schools, proximity of highways and transportation, and other factors that will be important to you. You've heard it before, but it's true that almost everything about a house can be changed except the location. Real estate agents are prohibited by fair housing laws from discussing certain things; for example, agents are not supposed to recommend neighborhoods or give their opinions about schools. Only the buyer can know what criteria to use when choosing where to live.

5. Talk to your agent about agency laws. Most agents will hand you a disclosure form to sign without explaining the ramifications. Almost all of the time, agents represent the seller, but buyer agency is an option available to you. Representation for the buyer by a buyer's agent is usually paid for by the seller, so it really makes sense to consider signing a contract with a buyer's agent.

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