Where do you start
Buying a home is such an exciting stepping stone to life. It has become very idealized; the concept of finding a real estate agent, then searching for your home, and closing on it can seem simple enough, but knowing every step of the home buying process is key to having a successful experience.
A lot of people don’t know that your very first step to buying a home is to get pre-approved by a bank or lender. Getting pre-approved means you have contacted a loan officer and filled out an application for a mortgage; that will consist of the borrower’s name[s], giving general info on your income, assets, debts, and your social security number along with permission to check your credit.
By giving this information, a loan officer will be able to calculate your debt-to-income ratio which will give the exact number of how much of a mortgage payment you can afford. This, in turn, will dictate how much house you can buy. Typically what happens next is you will reconnect with the loan officer and be given this pre-approval document. That is your golden ticket to go out and shop for a house. A pre-approval will come with an expiration date, so this is the time where you will have a real estate agent, and you will be actively making offers on a home.
Following this order is going to spare you from false hope and expectations. Although you know how much you make and how much you think you may be able to afford, it’s going to come down to who is funding the loan while following guidelines to say how much house that will be.
When I worked for another company, I remember a couple that was excited about buying their first home together and had already sent some homes they had seen on Zillow to their realtor, come to find out that they were all out of their price range and unfortantely just not feasible at that time with their income. They got a pre-approval from the loan officer I was working for, but their complaint was that there weren’t any nice homes that they wanted for the price range that they had been expecting. The home buying window closed and instead of getting a new one they had decided they just didn’t want to purchase right now. This story did not have a great ending, but I do hope that they eventually found a nice home.
Now, this is just my opinion, but what I am sure happened was they had their eyes set on a bigger and nicer house, however there without a doubt was house out there for them. At the least a starter home, one where it may not have had the pool they wanted, but one they can build equity in. One that will likely appreciate at rate that in five years they will have the means to buy a bigger home and now they can use that home that they weren’t too excited about as leverage. This is how wealth is built, money will come and go, but buying a home and owning property instead of paying off someone else’s loan, is where you start. So, just remeber that getting pre-approved is going to be your first step to achieving the dream and something I would love to get you started with.