If you are ready to buy a house, you will need to complete a few tasks first.
- Talk to your mortgage banker. Without a pre-approval it is not 100% clear what you can afford. If you are paying $3000 each month on rent, you might think you can purchase a home with payments over 30 years of $3000 each month. However, you need to qualify for the loan. If your income to debt ratios and credit scores are not worthy of a house in a particular price range, you need to set your sights lower. Applying for pre-approval of a mortgage is the only way to know for sure what price home you can qualify to purchase if you are going to use a mortgage.
- If you are a cash buyer, talk to your financial advisor so the money you will be using on a home purchase is protected. Many people lost equity in their stock portfolio this past year and had to use a combination of cash and a mortgage to make their purchase.
- Budget. If you can make the payments but have little money left for savings, you may want to consider a lower price point. It’s a good idea to have a cash reserve for things like appliance repairs/replacement, roof/gutter repairs, lawn equipment (if you currently don’t have any) and for other items that may need attention in your first year of homeownership.
- Make a list. What do you NEED? What do you WANT? What can you compromise on?
A recent article by Simplifying the Market explained the list this way:
- Must-Haves – If a house doesn’t have these features, it won’t work for you and your lifestyle (examples: distance from work or loved ones, number of bedrooms/bathrooms, etc.).
- Nice-To-Haves – These are features that you’d love to have but can live without. Nice-To-Haves aren’t dealbreakers, but if you find a home that hits all the must-haves and some of the these, it’s a contender (examples: a second home office, garage, etc.).
- Dream State– This is where you can really think big. Again, these aren’t features you’ll need, but if you find a home in your budget that has all the must-haves, most of the nice-to-haves, and any of these, it’s a clear winner (examples: farmhouse sink, multiple walk-in closets, etc.).
#5. Most importantly, find a real estate professional you can work with. It’s ok to interview a few for the job. You want to make sure your personalities align and that he or she listens to you.
Eileen Saunders, Realtor, Michael Saunders & Company, Sarasota FL (m) 662-404-0816
