The home buying process can be one of the most stressful times you will ever have. Regardless if you are looking at your first property or are a seasoned buying veteran there are a few basic items that you should know before you start your search. Not only will knowing these items allow the transaction to go smoothly it will help you find the best property at the best price. Amid all the excitement and anticipation of buying the perfect home you should take a minute to focus on these four areas.
Prequalification. You may find the perfect house but if you are not qualified to buy it you are wasting your time. The very first task you must take care of is seeing exactly how much you are approved for. A simple application complete with a credit pull and income check can give you a good idea of where you stand. This doesn’t mean you are in the clear but as long as nothing changes in your credit and employment and you have the down payment and closing cost assets you stated you will know what loan amount you can get approved for. This will have an impact on the purchase price ranges you will look at and even the location of these properties.
Monthly payment amount. There may be a huge difference in the amount you are prequalified for and what you are looking to pay every month. If your credit is strong and you have little to no debt you very well may be qualified for a number that is much higher than you think. Before you start your search you should take time and evaluate what you are paying now and where you want your new payment to be. Many first time buyers do not know everything that a new loan payment entails. In addition to the principal and interest you need to factor in monthly property taxes, homeowners insurance and if you are putting less than 20% down private mortgage insurance (PMI). Added up these can be much higher than you had originally anticipated. Know what you want to pay and start your home search from there.
Timeframe. If you see a house that you love are you prepared to act on it immediately? Whether you are currently renting or own a property you need to make arrangements to get out of your current situation. If you have a lease you may not be able to move out for several months. If you own a property a purchase may only be contingent on being able to sell your existing property. Your timeframe for buying will have an impact on the inventory that is available in addition to current interest rates and loan programs. You should have an idea of when you want to buy before you start looking.
Finances. The amount of available funds will directly impact when you can buy. Most loan programs require your down payment and closing cost money to be in an existing account for at least 60 days. If you are pulling money from somewhere else it can be difficult to get approved for a loan. Additionally you will need some up-front money for inspections, appraisals and deposit on the property. You may not need every dollar of your purchase in place but you had better be pretty close.
There is a lot to digest when you are starting your home search but if you can focus on these four areas you will certainly be ahead of the game.