Buying a home does not have to be an intimidating process. Regardless if you are looking for your first home or your last, there are a handful of steps you should take prior to reaching out to a real estate agent. The more work you put in before the actual buying process the easier things will go. With the end of summer quickly approaching, you need to act quickly if you want to be in your new home before the leaves change. Here are four things every buyer should do before talking to your real estate agent:
Make a budget. What you want and what you can afford may be two different things. It doesn’t do anybody any good looking at houses that exceed your budget. There is often a difference in the amount you are prequalified for and the amount you are comfortable spending every month. If you are coming from a rental there are a handful of new expenses you need to consider. Not only do you need to be comfortable with the total monthly housing payment (principal, interest, taxes and insurance) you need to budget for utilities, cable, car payments, credit cards, food and everything else. Getting into a home should not be your goal. Getting into a home you are comfortable paying every month should be what you are after.
Get prequalified. Once you have a total housing payment in mind you should move to get prequalified. Regardless if you use a local lender or mortgage broker the basic process is the same. There is a quick application consisting of income, employment, down payment and asset verification. You will provide your lender with personal information, so they can run a credit check. Your credit score often dictates your necessarily down payment and even your interest rate. Your preapproval is based on a mix of credit score, down payment and something called debt to income ratio. Your lender will provide a maximum monthly payment amount and a maximum purchase price range. This is important information for your real estate agent to use so they can effectively and efficiently find you the right home.
List home preferences. In a perfect world we would all live in the home of our dreams. However, something called money often gets in the way. In an effort to get a home that is functional and enjoyable for you it is important to list some preferences you want in a home. Whether it is a 3rd bedroom, garage, fireplace, pool or yard space make a prioritized list of items you want. You may not be able to get it all, but by listing what is most important first your real estate agent has an idea of what to look for.
Understand time frame. Do you need to be in a new home before the start of the school year? Is your lease end date quickly approaching prompting you to take action? Are you motivated to have your transaction in this calendar year for tax purposes? Whatever the reason you need to figure out what kind of timeframe you are working with. The timeframe may influence which properties to pursue and ultimately make offers on.
Once you have these items in order you should reach out to your real estate agent and get the ball rolling. There is always a lot involved in buying a home so the more prepared you are from the start the easier the process will be for you.