Easy to Follow Home Buying Guide

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Home Buying Guide

All new home buyers require as much information as possible before purchasing. A well-informed buyer is more likely to make a purchase they’ll enjoy for years than someone who doesn’t understand the complexities of real estate and home-buying. That’s why it’s a good idea to research and hire a real estate professional when buying a home.

Here are some tips you should keep in mind as you approach the whole home-buying process. These tips are easy to implement and can help set your expectations:

  • Start saving early- Who saves money, right? If you’re looking to buy a home, you should. You can expect to pay a significant down payment (up to 20%) unless you qualify for a loan program offering 3.5% down. Don’t forget about closing costs and other move-in expenses because these will add up as you progress toward moving into your new home. Buying and moving can be costly. If you start saving early, you’ll be less worried about finances when you’re going through the process.

Quick tip: A higher downpayment may help you secure a more favorable interest rate on your mortgage.

  • How much can you afford?- We usually want more than we can afford, and when it comes to a 30-year mortgage, that’s not always a good thing. Calculate just how much you can comfortably afford to spend on a house before you begin shopping around. Lenders have tools online that are easy to use and give you an excellent idea of what you can afford. Remember, experts, recommend the 28/36 rule. This rule states that the total costs of your monthly mortgage shouldn’t exceed 28% of your gross monthly income; all of your combined debt shouldn’t exceed 36%. Keep this rule in mind; it will help you budget wisely.
  • Maintain good credit- You should monitor your credit, especially when looking to obtain a mortgage. Your credit score will likely be crucial in determining mortgage terms, including the interest rate. If you’re saving, paying your bills on time, and keeping a low balance on your credit cards, you won’t hurt your score. Traditional lenders are looking for buyers with a credit score of no less than 620. Check it to know your score, but look for any potential errors that you can fix and work to improve your score. Don’t cancel any accounts and ask for advice if you’re going to do anything you think may affect your credit.

Monthly cost differences with different mortgage rates

$325,00 = $1,740 at 4.976%

$325,00 = $1,949 at 6%

That’s a difference of $2,400 a year.

*other mortgage fees are not included in the example

  • Explore your mortgage options– There are many loan options available when you’re looking to finance a house. It would be best to examine them all to see which ones fit you and your family. Choose the option that best suits your circumstances, making sure not to handcuff you financially for months and years. Check out FHA, Good Neighbor, USDA, and VA home loan programs. They all have incredible benefits that can save you thousands of dollars throughout the life of your mortgage. Each has eligibility requirements; most first-time homebuyers can qualify for a program. Check with homebuilders about financing and get a few estimates from lenders. Look at the different pros and cons, fees, and other closing costs.
  • Get a pre-approval- Getting pre-approved for a home loan gives you confidence when shopping and can help in other ways. It can save a lot of time when shopping around for a home because it tells a home seller that you are a serious buyer. Plus, being approved can also give you a leg up on other interested parties. Sellers are looking to find buyers quickly. If you have everything in order and can obtain financing in 3 to 4 weeks, you know where you stand at all times and may avoid competition from some buyers. Getting pre-approved is worth the investment in time. A pre-approval is not the same as a pre-qualification. A pre-approval is more specific and carries more of a guarantee.
  • Choose a skilled real estate agent- A real estate agent will ask you questions about the house of your dreams, the items you need, and the items you want. They’ll ask questions you haven’t even considered and take time to understand your needs, so they can find you the home you want. Agents have access to the local MLS and can scour the area for homes that might be a good fit. Real estate agents have information about new communities in the area and promotions offered by home builders. They may know of homes owned by extra motivated sellers. They can answer your questions about neighborhoods, home prices, schools, commercial centers, etc. They’ll also negotiate on your behalf and help you secure the home that is best suited for your needs. Best of all, if you’re buying, the seller typically pays their commission. Think of it as free expert advice for one of the most important decisions you’ll ever make.
  • Pick the right neighborhood- Consider all the pros and cons of different homes and the communities they’re in and near. Look into places you’ll visit like local grocery stores, schools, gyms, etc. Find out if the areas will match your lifestyle and any changes that may happen in the future. If you are still in the planning phase, tools and maps online can help you explore new construction neighborhoods throughout the nation. Using a large home builder’s map will show you popular construction areas throughout the country. Since builders usually build near each other, it’s an excellent way to discover popular construction areas near major cities. You’ll want to do more extensive research when you are ready to buy and search for the home you want.
  • Stick to your budget- Once you’ve determined what you can comfortably afford, you should not exceed it. Most homeowners that do usually regret it. It may mean that you make a few compromises, but it’s wise to do when obtaining a mortgage. To avoid stress, establish a price range you can afford, and then make sure to stick to it, even if you have to wait on upgrades.



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