Buying a new home is a common yet complicated process. In the States, homeowners tend to buy new homes less than every ten years, which means many home buyers are experienced. That doesn’t mean they fully understand the process, and it certainly doesn’t mean they are any more likely to go into it alone. That’s because from finding a home to purchasing it, there are a lot of steps to go through.
The first and most important step in buying a home is to work out what you can afford. Looking around at houses that are out of your price range will only upset you or encourage you to jump into something that’s beyond your means. So, first you need to look at your finances and outline what you can afford to budget, for down payments and then regular mortgage payments. With that figure calculated, you can move on in your search.
Once you know what’s within your means, it’s time to take things to the next level. Naturally, you are going to need a mortgage to help with the home ownership. Shopping around for a house before you know that you can qualify for a mortgage isn’t a worthwhile endeavor. That’s why this next step is to get pre-approved for a mortgage. By doing this, you will get a lot of the leg work out of the way and will know what the bank will let you afford.
Not only does that pre-approval make your search easier, but it increases your chances of being able to buy the home you want. Quite often, house sales come down to the wire, and it’s easy for someone to beat out another offer. By being able to show that you have been pre-approved for enough of a mortgage to buy the home, the sellers may actually opt to sell to you rather than risk taking the other offer, from someone who has yet to be approved.
Remember, knowing what you are approved for and knowing what you can afford yourself isn’t where things end. Buying a home involves more costs than just the advertised or agreed upon figures. There are a lot more things you’ll need to pay for, both upfront and over the years. Remember, property tax is an expense that will have to be added to everything each month. Before that, you will need to pay closing costs, and possibly Private Mortgage Insurance, should you not be able to afford a high enough down payment.
As you take all of this knowledge and understanding with you on the search, remember that you are looking for two different things. A house that meets your needs and a house that meets your wants. First, you are looking at buying a home that meets your needs. This is first. You need a certain number of bedrooms, you need to be in a certain geographical area, you need to have a garage, etc. Wants include things like the type of flooring. Once you find a few homes that meet your needs, you’ll be able to look a bit closer and find one that meets your wants.