Buying the right home is more than about choosing something that meets your needs and most (if not all) of your wants. As buying is mostly a financial endeavor, it is essential to think of how you are going to afford the house or finance the purchase. Unless you have enough money to pay the house in cash, you need to apply for a mortgage and find a home that suits your budget.
Wise buyers go beyond doing their homework or knowing more about the buying and financing process. They start the process right, consider their finances, manage their expectations, and get professional help. This leads to a less stressful home buying experience, which helps you avoid financial mistakes that can haunt you later on.
Where should I start?
While visiting open houses or home searching is fun and exciting, this shouldn’t be your first move when buying a home. This is because it can only set you up for heartbreaks and disappointments, especially if you later found that the house is beyond what you can afford. The best way to start is to consult a lender and get a mortgage pre-approval.
Getting pre-approved demonstrates your creditworthiness and shows realtors that you’re serious about buying. It also helps you determine how much you can afford. Keep in mind, however, that the figure indicated in your preapproval letter is the maximum amount of loan you can borrow. It is best to set your budget below that amount and look at houses that fit that number.
How much down payment should I make?
The ideal amount is 20% of the purchase price but is still okay to make a payment below that mark. It is also good to know that there are loan programs like the Federal Housing Administration (FHA) that offers mortgages with a low down payment (as little as 3.5%). FHA loan providers in Mesa also note that such mortgages also allow you to get financing even with a less-than-stellar credit score.
Keep in mind, however, that making a low down payment requires paying insurance premiums. The same is also true in getting a conventional loan, which is the form of private mortgage insurance (PMI). You can decide to put up a more substantial down payment to avoid this cost, but make sure not to use all or most of your savings. You still need a rainy day fund for emergencies in the future.
Where can I get help?
The home buying process can be a little overwhelming if you’re new to it. This is why it is not enough to solely rely on Internet research. While it does help, do take note that you can navigate the process better with an expert by your side. A real estate agent, for instance, can help you with property searches and negotiation, as well as advise you about the best offer for the home.
You can also benefit from sitting down with mortgage brokers or lenders to know more about your options. Professional like these can clearly explain to you what to expect in the process, so you’ll know what to expect and therefore manage your expectations.
Approach home buying process right way. Take extra time and effort in learning more about the process and consulting the right professionals.