HGTV's Egypt Sherrod Says To Do These Things Before You Start To Look At New Homes
When it's time to consider buying a home, many people start thinking about all the features they would like it to have. A large kitchen, a spacious backyard, and a certain number of bedrooms can all be on the house hunting wishlist. While this is a fine place to start, Egypt Sherrod from HGTV's "Flipping Virgins" and "Property Virgins" suggests a different starting point.
Sherrod is a real estate expert who helps clients get a clear sense of the financial side of home buying, not only the aesthetic side. Knowing if you're financially ready to purchase a home is an important first step. This can include lowering your debt-to-income ratio to less than 43%, according to Rocket Mortgage. Egypt Sherrod knows that, while it's not the most exciting thing to think about, getting your financials in order before you start shopping for your home is a must. On her website, she lays out the most important considerations of the home buying process.
Check your credit
One of the first things you should do before you start looking for a home is check your credit score and get everything in order. "A high FICO credit score can make all the difference when it comes to securing a loan with favorable interest rates for home buying," Egypt Sherrod says. She explains that payment history, overall debt, length of credit, new credit, and types of credit all affect your credit score. The higher your score, the better off you'll be when you head to the bank to secure a mortgage.
Credit scores fall between a score of 300 and 850. If you have a low credit score, you can increase it. Not missing payments and paying at least the minimum every time are easy ways to help boost your score, according to Experian. Paying down high balances will also help increase your score. Better credit has plenty of benefits for your wider finances, but especially when it comes to buying a house. You can get your credit report for free, and per Sherrod, the credit check process should start a minimum of six months before you begin to seriously shop for a home. This gives you time to improve your situation and get closer to an ideal credit score.
Get pre-approved
With a high credit score you'll secure better mortgage rates, but Sherrod still suggests getting a mortgage pre-approval. "A pre-qualification letter and a pre-approval letter are NOT the same thing," the real estate expert explains. "Many borrowers don't understand that getting pre-qualified for a loan isn't the same thing as getting pre-approved for a loan. Borrowers are well advised to complete both steps before they start looking for a home, so that they know in advance how much they can afford."
Pre-qualification gives you an estimate of what you could borrow, while pre-approval proves your creditworthiness, says Bank of America. After completing a mortgage application, your information will be verified and your credit will be checked. The bank may inquire about your employment history, previous credit card payments, or loan payments.
After all your information has been confirmed, you'll then get a pre-approval letter that offers you a lending amount. Getting pre-approved shows sellers that you're serious about purchasing a home. This can potentially be beneficial in making your offer look more attractive to sellers.