Posted by Chad E. Smith
Buying a home isn’t as simple as it was a decade or two ago. Prospective homeowners are being scrutinized more than ever, and it can be hard to qualify for a mortgage. Banks and mortgage lenders have had to tighten up lending criteria, requiring not only high credit scores but also documented employment, income, and financial portfolios.
To help keep surprises from derailing your opportunity to becoming a homeowner, it’s important to do your homework. Here are some guidelines to keep in mind as you begin your home search:
- Before you start house-hunting, get copies of your credit report. Make sure the facts are correct, and if there are mistakes on your credit report, contact the credit reporting company immediately. After you address errors, get a new copy of your credit report to make sure the corrections were made.
- Getting pre-approved for a mortgage will put you in a good position to make a serious offer when you find the right house. Pre-approval from a lender is based on your actual income, debt, and credit history—not to be confused with pre-qualification, which is a brief review of your finances.
- Take time up front to conduct your own market research on where you want to live. Consider the quality of the schools, your commuting time, proximity to highways, tax base and any other factors that will affect your lifestyle and cost of living.
- Work with a reputable real estate agent who understands your financial situation, your goals, and the communities and neighborhoods you’re considering. A good agent will respect your limits and not show you houses that are over your price range, unless you make that request.
- Don’t be tempted to buy more than you can afford. Use an online real estate calculator to determine how your income, debts, and expenses will affect what you can realistically afford to buy, like SBLI’s Home Affordability Calculator.
- Look for a home you can commit to living in for at least a few years. The transaction costs of buying and selling are substantial, and could cause you to lose money if your house doesn’t increase in value by the time you sell.
After you’ve bought your new home, don’t forget to protect your mortgage against the unexpected with life insurance. Term life insurance may be an appropriate choice for you to consider.
To learn more about protecting your mortgage with life insurance, call SBLI at 1-800-438-7254.