Buyers Tips for Homes in Northern Michigan

You may be tempted to jump right in and start your search for Northern Michigan real estate, and that's fine, but what should you consider first? 45th Parallel Realty encourages you to read through these tips for the prospective home buyer:

Plan and Prepare

There are some things you should do right away, before you begin the home buying process. If you take the time to adequately prepare you'll be able to avoid common home-buyer mistakes.

Manage your Credit

The very first thing you need to do once you've considered searching for a new home is to start building your credit. It is vital that you build a good credit rating, as lenders want someone who has a proven record of paying their bills on time. Consider ordering a credit report to get your FICO score, the score that lenders go by. It will give you a clear idea of where you stand. To begin improving your credit right away, start paying all of your bills on time every month, and work to keep the monthly balances low on your credit cards.

Besides your credit score, banks will look at your gross monthly income, your debts, and your savings. It helps to keep your debt down to a low percentage of your income. Typically, lenders won't allow you to exceed 36% of your income in total debt (a bit higher for FHA loans). If you are having trouble with debt, consider talking to a debt management and credit counseling service.

Define Your Goals

If you want to find the perfect home, you need to be clear about your goals. Take the time to research your new neighborhood to make sure it's a good fit for you. Make sure you can afford to live in the area you've chosen. How much will you honestly be able to spend? Price some properties that interest you and see if your expectations are in line with your budget. You will want to spend no more than 20-25% of your pre-tax income on your housing expenses. Most lenders will not let you go over 28% of your income. You'll also need to be able to cover a down payment of up to 20% or more, and closing costs of about 2-5% of your loan. These closing costs cover various government fees, insurance fees, documentary stamps, and other expenses. You may ask your lender for a Good Faith Estimate of these expenses. Try our Mortgage Calculator to estimate your total monthly payment.

Organize Yourself

Save time now, and get everything together. To secure a loan, you will probably have to produce recent pay stubs, W-2s from the past couple years, tax returns, and recent bank statements. Keep all of your paperwork together! If you know you'll be applying for a loan, file everything as it comes in. You don't want to be rejected because of missing documents or even missing pages.

Find an Agent

The Northern Michigan real estate market is unique, with its own life and vitality, its own trends. Every local housing market is different, and so too is every home. There is no general advice that can cover you in every scenario. You need personal involvement from an experienced professional; someone who can give you sound advice about the home purchasing process, from selecting a home to negotiating a contract. 45th Parallel Realty is here to help you find the right professional real estate agent to walk you through the steps to getting your new home. Please contact us if you have any questions.

Get Pre-Approved

A Pre-Approval letter from a lender will greatly increase your buying power. A seller who sees that you are able to obtain financing will be more likely to accept your offer. Your prospective lender will review your credit and your financial records, and help you pick a mortgage program that you'll be able to afford. It is fine to get pre-approvals from multiple lenders, but keep in mind that lender will check your credit, and too many credit checks in a short period of time can negatively impact your credit score. Your pre-approval will give you an exact idea of what you can spend, which will narrow your home search and save you time and energy. When you're faced with deadlines in the purchasing process, you'll already have your financing arranged and you won't be forced into any hasty decisions.