A resolution is simply the act of coming up with a plan--and following it through. So if 2011 is the year that you're going to finally buy a new house, congratulations for making a resolution! That said, if you're smart, make a few more. After all, the reason so many so-called New Year's resolutions fail is because people make grand pronouncements -- I'm going to lose 30 pounds -- but they don't come up with any more resolutions for the plan on how to make the big resolution happen.
So if you're going to buy a house this year, here are our resolutions for you. If you make these resolutions, we can almost guarantee that not only will you follow through with buying your home, the process will go a lot more smoothly!
#1: Before I look at homes, I will seek pre-approval for my mortgage.
Even the most inexperienced homebuyer probably recognizes that this is important. But in case you're unaware, before you get very deep in the home buying process, you should go to a lender and try to get pre-approved for a mortgage. You won't be locked into any interest rates yet, says Nicole Hall, editor-in-chief of the blog on LendingTree.com, a well-known online site that offers comparison shopping and access to mortgages and other types of loans. She says that at this point the goal is "simply to make sure that a lender will actually loan you the money to buy a house."
As Horton says, "It's emotionally draining to fall in love with a house and not be able to secure a loan."
#2: Before I look to buy, I will clean up my credit score.
Closely related to the pre-approval resolution, if you suspect you won't get into buying your house until the last half of 2011 or maybe even 2012, then at least look into cleaning up your credit history, to increase the odds of getting pre-approved. Every 12 months, you can get a free credit report from each of the major credit bureaus. You can order all three credit histories at once, if you want, but if you'd like to be able to look at your credit history relative often, and for free, it might be more beneficial to order one every four months, so you can monitor your credit history, again, for free, indefinitely.
#3: I will number crunch and buy a house I can afford.
Granted, in today's market, it's harder than it used to be to buy a house out of your price range. In the past, many lenders used whatever creative financing they could devise to get you in the most expensive house they could, but now banks are taking a hard look (maybe too hard, some might say) at whether you truly can make the mortgage payments. That said, you yourself still need to whip out the calculator and scrutinize the financial side of owning a house. There's plenty to consider, from how fat a mortgage payment you can afford to pay to whether you want to pay for additional points--a portion of the interest that you pay at closing--in order to get a lower interest rate.
#4: I will think long term.
It used to be that it was pretty common for a first-time homebuyer to purchase a modest-sized house and consider it their starter home. In other words, there would be more, maybe quite a few more, houses in your future. Aiming for a modest abode is great but because there are so many costs involved in purchasing a home, and because the real estate market is slowly coming out of a long slump, it's not a great move to buy a house if you think you'll be there less than two years, and all the better if you can envision yourself living there for at least four or five years and possibly longer.
If you're able to sell in a few years and know you won't take a loss, and you can easily enough trade up, great, and good for you. But in the meantime, when you're looking at a house, take a look at the community around your prospective home. Ask yourself whether you can imagine living here in ten years. For instance, maybe you're single, young and while you want to marry and have kids, you can't imagine that you'll be doing that for another five or ten years. Check out the school district anyway. If it's pretty crummy, and you know you want kids, the smarter move is to look for a community that does have a nicer school district. You want a community that you can grow into, not one that already has you thinking about an exit strategy. Because if you can't exit easily, you're going to be very unhappy.
#5: I will think about moving and other logistics now.
True, you have plenty of other things to worry about, but the point of thinking now about how you're going to haul your belongings from one dwelling to another is that by the time moving day comes, you won't be worried. It's far too early to reserve a moving day, but it's not too soon to search web sites and call moving companies and find out what their rates are now, so you can decide whether you're going to be hiring professionals or, once again, plying your friends and family with bribes of pizza and beer. If this is your first house, you can research homeowner's insurance. You'll never think of everything, but if you think of anything, anything at all, your future self will gratefully look back and think your present self is an utter genius.
Excerpts By Geoff Williams, FrontDoor.com
COASTAL SAN DIEGO PROPERTIES