Have enough cash for a down payment and feel prepared to buy a home? The home-buying process can feel overwhelming for first time homebuyers. These two tips will prevent you from making a mistake that will cause you to miss out on a home that you love.
Determine Your Budget
A common mistake when house hunting is not setting a budget. The temptation of owning a home with everything you want can be high, causing you to buy a home that is way outside your price range.
Start by getting pre-approved for a mortgage with a local mortgage lender. The pre-approval will let you know how much the lender is willing to give you to purchase a home. The potential loan amount is based off of your income, job, current savings, credit history, and current debt that you still owe. Lenders will look for your debt to income ratio to be below 43% to qualify you for a mortgage.
Keep in mind that the figure you receive is for the loan itself, not the price of the home itself. The loan amount is for the remaining cost of the home after the down payment.
The maximum loan amount should be used as a guide to let you know the range of homes to look at, not taken as a challenge to see how close you can get to that figure when buying a home. With a price range in mind, you can start focusing on houses that will be practical for your budget, and not waste time looking at houses you will never be able to afford.
Check MLS Listings Daily
Your realtor is supposed to help find properties for sale that interest you, but they can only do so much in a day. You will want to start looking through the MLS listings on your own each day, while paying close attention to properties that have been listed since you checked the previous day. A great home can get an offer on it quickly, and if you do not check listings regularly, you may miss your opportunity to buy your dream home.
Arrange to have your agent show you a home when you find one that interests you. Your agent will be the key to showing you the homes that you find, and talk to the seller's agent to find out if there is any interest on the property. While your realtor can do a lot to help with the purchase a home, be prepared to do some searching on your own to avoid missing out on a great home.