The home buying process can be a very emotional and confusing time. Between getting your loan approved and finding a property you are comfortable in there are many decisions to make. The best way to handle this is to prepare yourself for this before you get started. Many times a good list can help provide you with some guidance and clarity. Here are six tips that will help make your first home purchase as smooth as possible.
Preapproval. Almost all purchases start with the preapproval process. The mortgage industry has undergone many changes in recent years. What you may have been approved for years ago may not be applicable today. Reach out to your local lender or mortgage broker and see what you are qualified for. With your preapproval they will also tell you what you need to do with your down payment funds and what additional steps you need to take. There will always be the occasional unexpected item during the approval but the more you know before you get too far the easier the buying process will be.
Get household budget in order. Your preapproval amount and what you can really afford may be two different numbers. There are many bills and payments you make as a homeowner that you do not as a renter. Make a list of all project household payments, credit cards, auto payments, school loans, gas, food and anything else you can think of. From there plug in what number you are comfortable with on a mortgage payment. You need to be comfortable in this payment for the next thirty years.
Think long term. One of the most common job interview questions is where do you see yourself in five years. As you consider your purchase you should ask yourself this same question. Do you expect to be married? If you are married to you want to have children? Do you plan on moving? These questions will impact the type of house you buy, the location and the price range.
List property must haves. What is really important to you in a home? The perfect home checks off all the boxes on your wish list. The reality is that in most markets you will not be able to have everything you want. Maybe you can find the perfect home but it will be out of your desired market or out of your price range. Prior to starting your search you should make a list of what you need from a house. This could be a certain number of bedrooms, a big back yard, a fireplace or anything else that you desire. The more you know about what you want the easier it will be for your real estate agent to find it.
Research the process. Your new home is one of the biggest purchases you will ever make. There is more information available on every step of the process than ever before. Take some time to research everything from the mortgage application to the real estate contract. List any questions you have and don’t be afraid to ask your lender, attorney or real estate agent. This is their job and what they are compensated for.
Start looking. If you have everything in order and are ready to start looking there is no need to wait. Trying to time the market at the exact right time is difficult, if not impossible, to do. Once your finances are in place and your preapproval is ready don’t wait to start looking.
Purchasing your first home can be a long and winding journey. These six tips should give you some confidence and make the process as smooth as it can be.