Preparing Yourself For the Home Buying Process
Buying a house can be confusing, overwhelming, and stressful. Whether it's a new area, market, or your first home, it can be hard to know where to start. Here are a few important steps to beginning your home buying process, and ensuring you are financially prepared to find your perfect home!
Getting pre-approved should be the first step in your journey. Pre-approval ensures a loan officer has agreed to eventually lend you money towards the purchase of your home after analyzing your finances. Not only does it allow for conditional approval, but it also allows you to analyze your own finances and their relationship to your home-buying process: how much you are able to borrow, along with your interest rate and what your monthly payment may be. Pre-approval will also strengthen your buying power, it shows preparedness to sellers and assists the speed of eventual transactions. After you have been pre-approved, avoid any actions that may result in financial instability: large purchases, job loss or change, and any unpaid bills. Getting pre-approved will help you to search for your next home with confidence and preparedness.
Before buying a home, It is also important to understand the kind of mortgage that works best for you. Conventional Loans, the most common type, are offered by private lenders with 30-year and 15-year fixed-rate mortgages being the most common. Simply put, a 30-year mortgage means a lower monthly payment at a higher interest rate, whereas a 15-year mortgage would have a higher monthly payment with a lower rate. Depending on your financial position, a 15-year mortgage would cut your debt-time in half at the cost of a higher monthly payment. Government-Backed Loans help to assist those who are financially unable to qualify for conventional loans, with FHA and USDA mortgages being the most common. Buyers are able to qualify for FHA loans with a much smaller down payment, and USDA loans allow for reduced interest rates. Depending on your financial position, there are many different mortgage options out there, find the one that works best for you.
Lastly, there are a number of financial mistakes buyers should avoid so as not to derail their buying-process. Your house payments should never be more than 25-30% of your take-home pay, avoid pursuing listings you cannot afford by using our Basic Loan Calculator. Changes to your credit score, such as opening a new line, will derail and slow down your buying process because lenders will most likely need to review your loan approval again. Make sure you also secure the right kind of loan for you, make sure you have thoroughly looked and that you fully understand your required down payment.
Buyers should also find the right agent before making the big jump of purchasing. A buyer's agent is trusted to handle the paperwork, identify the right homes, and negotiate the most fitting offer for their client. Given the complicated and detailed nature of the home-buying process, you want to find an agent to help lighten this load. To find your perfect fit, meet our team of trusted and qualified brokers on our website.
Sources:
“Preparing to Buy a House.” Windermere Real Estate, www.windermere.com/buy/preparing-to-buy-a-house. Accessed 13 Nov. 2023.
