They say it’s difficult to buy a home these days. That’s because prices are high, and there is a limited supply of available homes for sale. Still, those of you planning to buy a home are so fortunate. These days, you can do all your preparations online when preparing to buy a home. Here are some tips on how you can do this.
Find the Requirements of Mortgage Lenders
Before the internet age, you would have to go to the offices of various lenders to get copies of their requirements. You would probably have to take time off from work to set aside one weekday just doing this. And if their offices are all over town or your city, you may not even be able to cover all of them in one day.
You can check out the requirements of as many lenders as possible by simply checking their websites. It’s best to check out as many lenders as you can to compare your options. Knowing all the requirements will let you know what to do to get approved for a mortgage loan.
Find Your Credit Score
When you apply for a loan, a mortgage lender will get your credit score online from the computation of data analytics company Fair Isaac Corporation (FICO).
They will get your FICO Score 5 from Equifax, FICO Score 2 from Experian, and your FICO Score 4 from TransUnion. They will then determine the median score from all three credit scores and use that for you. However, if two scores are the same, they will use that even if it’s higher or lower than the third.
You better know your credit score, too. The law requires Equifax, Experian, and TransUnion to provide anyone with one free credit report a year. In 2020, amid the pandemic, all these credit reporting agencies decided to provide free credit reports weekly. Recently, they extended this service to December 31, 2022.
You can request your free reports at AnnualCreditReport.com. Check your credit score and if you find any errors, dispute them immediately. Be careful with other sites as they may steal your information.
Send Mortgage Applications for Pre-Approval
You do not have to go into a physical bank branch to submit your mortgage applications and receive pre-approvals. All these are done online. This can save you time and money, as you can compare rates and terms from the comfort of your own home.
Remember that you can only accurately compare the rates and terms of lenders from their pre-approval letters. You cannot simply compare their mortgage rates based on the averages they post online. That is because the rate they will offer you will be based on your credit score and other factors in your information.
Make sure you send out all your mortgage applications within 45 days of each other. This will ensure that all of them are counted as just one single inquiry. Remember that each inquiry can pull down your credit score.
The pre-approval letter shows the interest rate each lender is offering you plus other details like the down payment they are asking for, and their closing rates. Study these carefully because although one may offer low interest, it may have high closing costs.
Find Available Homes Within Your Budget
In the past, you would have to look through classified ads in newspapers or drive around town looking for a “For Sale” sign in front of a house. Nowadays, there are plenty of websites that list available homes for sale. You can even filter your search by location, budget, and the type of property you are looking for.
Some websites will also let you know how much similar properties in the area have sold for. This can give you an idea of how much you should offer for the home you are interested in.
You can also find a real estate agent online who can help you. They make things easier for you as they have access to the Multiple Listing Service (MLS). This is a database of all the homes that are for sale in your area.
You can look through houses you are interested in through virtual showings. These are done using video conferencing software like Zoom or Skype. You can then narrow down your options to one or two and just visit the home or homes you will most likely make an offer on.
Do not forget, however, that you must first hire a professional home inspector to physically inspect a home before you make an offer on it. This is something you do not want to do remotely.
Online Closing — Dependent on State Laws
As of May 2022, not all states allow completely remote closings on home sales. Some require that at least one party be present in person.
The closing is when the home’s deed is transferred from the seller to the buyer. The buyer will also hand over the purchase price to the seller during this time. At the closing, both parties will sign all the necessary paperwork. This includes the mortgage loan documents and the deed to the property.
The majority of the paperwork can be signed electronically. But there are a few states that still require wet signatures on these documents. You will need to check with your state’s laws to see if online closings are allowed. You should also check with your lender to see if they allow remote closings.
Up to the point before closing on a sale, however, potential home buyers can do almost all preparations online. Aren’t you glad you are living in this digital age?