MAKE A GAME PLAN

Buying a home is a time of enormous possibilities and intense preparation. Doing some preliminary planning before you begin your home search will make the entire process more manageable and less overwhelming.

As part of your initial game plan, you should:

• Fine-tune your credit rating
• Explore mortgage pre-qualification and pre-approval
• Become an educated buyer
• Create a wish list to help you learn what you need, and what you want - or don't want - in a new home.

Check Your Credit Rating
Even if you're sure you have excellent credit, it's wise to double-check at the outset. Straightening out any errors or disputed items now will avoid troublesome holdups down the road when you're waiting for mortgage approval. You may see disputed items, in addition to errors caused by a faulty social security number, a name similar to yours, or a court ordered judgment you paid off that hasn't been cleared from the public records. If such items appear, write a letter to the appropriate credit bureau. Credit bureaus are required to help you straighten things out in a reasonable time (usually 30 days).

TIP: Make sure that any outdated derogatory entries are deleted from your credit file. Adverse credit information is not supposed to be reported or included on your credit report after seven years (except bankruptcy information, which can be reported up to ten years).

TIP: Officially cancel inactive credit cards. If you have an inactive credit card with a $5,000 limit, even though you owe nothing on it, some mortgage lenders will consider that a potential future debt. Too many inactive credit cards with significant credit limits could keep you from obtaining a mortgage loan. Don't just cut up your extra cards; officially cancel them, and do it now so there will be time for the news to reach the credit bureaus.

TIP: Hold off on making any major credit card or car purchases while you're waiting to apply for a mortgage. Monthly payments you're obligated to pay will be counted against you, and reduce the amount of the mortgage loan you'll be offered. Even if you've been pre-approved for a mortgage, that approval is subject to last-minute evaluation of your financial situation, and a spending spree for appliances, furniture and other goodies intended for your new home may wreck your chances for buying it.

Pre-qualification and Pre-approval on a Mortgage
Any reputable real estate broker will "pre-qualify" you for a mortgage before you start house-hunting. This process includes analyzing your income, assets and present debt to estimate what you may be able to afford on a house purchase. Mortgage brokers, or a lender's own mortgage counselors can also calculate the same sort of informal estimate for you.

Obtaining mortgage "pre-approval" is another thing entirely. It means that you have in hand a lender's written commitment to put together a loan for you (subject only to the particular house you want to buy passing the lender's appraisal). Pre-approval makes you a strong buyer, welcomed by sellers. With most other purchasers, sellers must tie the house up on a contract while waiting to see if the would-be buyer can really obtain financing. The down side is that you must pay application fees to cover the lender's paperwork in verifying your employment, income, assets, debts and credit rating. If you later decide not to use that particular lender, you'd have to start all over again elsewhere - with no rebate. Pre-approval will also speed up the entire mortgage procedure once you've found the house you want. The only remaining question will be whether the house will "appraise" for enough to warrant the loan.

Become an Educated Buyer: Research Neighborhoods, Read Ads and Visit Open Houses
If you were changing cities, the standard advice used to be to subscribe to the local newspaper in the new town and start reading local news and classified ads to get a feeling for different neighborhoods. Although that's still a good idea, you can simplify and streamline the house-hunting process by using the Internet to Find a Home, Find a REALTOR, Find a Neighborhood, and Find Resources.

For local moves, you have the advantage of driving around neighborhoods that interest you and looking at lawn signs. Particularly on weekends, you will see "Open House" postings. Don't hesitate to walk in, even if you're not ready to buy yet. Visiting open houses is an excellent way to familiarize yourself with the market and judge various real estate agents you may meet along the way, and it won't put you under obligation to anyone.

Your Wish List
Making sure you end up with the right home involves figuring out exactly what features you need, want and don't want in a home. Before starting your search, you should make a "wish list" to decide which features are absolutely essential, which are nice "extras" if you happen to find them, and which are completely undesirable. The more specific you can be about what you're looking for from the outset, the more effective your home search will be. Also keep in mind, that in the end, every home purchase is a compromise.

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