How to Sit Pretty in a Real Estate Buyers Market

By: Kristin Abouelata - Home Loans

It's a buyer's market right now. Rates are low, houses are available. There will always be people buying and selling homes. Opportunities abound from which to benefit. But, how do you make sure you're sitting in the catbird seat when the right opportunity is available to you?

Get your ducks in a row. First things first, review your credit. Now. Word on the street is 79% of all credit reports have errors. Some may be significant enough to prevent you from qualifying for a mortgage. You can pull a free report from each of the three bureaus every twelve months by visiting annualcreditreport.com. If you do see something that looks out of whack, address it immediately. Take your credit report seriously. Treat it with respect because your credit score and history are the most important indicators to be considered when applying for a mortgage.

Start saving money for a down payment. Sure, there are 100% loans still available, especially for the first time homebuyer. However, you are going to save money in the long run if you have a little something to put down. Mortgage insurance, required on loans with less than 20% down, is tiered. You will not pay the same monthly mortgage insurance for a loan with 5% down that you would if you put 10% down. And don't forget, you still may have to foot prepaid items like taxes, insurance, interest, etc. or a portion of the closing costs.

Make sure you really know what you make and are able to verify it. Also, know your true bank and asset balances. The days of stated income responses from underwriting engines are few and far between. There are exceptions, but who knows if you are one of them at this point? Better safe than sorry.

And here is a great bit of info to keep your credit score high. Try to keep your credit cards to under 25% of the available balance. Not always easy to do. I completely understand. However, if you are unable to pay it down, you may want to see if the creditor will raise your credit limit to tweak your ratios.

Ok, so here is the no brainer tip. Pay your bills on time. Always avoid paying over 30 days late. Always pay your mortgage first, then sweat the other bills. That one ding on a mortgage payment can completely knock you out of the lending arena.

After addressing the above, consult a good mortgage lender and see where you stand. It's important to be pre-qualified for a loan before you find a house. It really strengthens your offer when the seller knows you are a serious contender who can obtain financing. You negotiate from a position of strength.

Don't forget to ask around or use a realtor you know and trust. Just like a lender, the more experienced - the better. Work only with people with whom you 'click' that listen to you and work hard for you.

It's a great time to buy. If you're so inclined, use these tips and be prepared to take advantage of the current housing climate!

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