5 Steps every home buyer should know before they start looking for their new home!
What steps does a home buyer need to do in order to begin the process buying a home?
This is a very important question, and it’s not a simple as most people think.
Step 1: decide how much you want your monthly payment to be.
This is the 1st step because knowing how much you’re willing to pay each month is far more important than how much you qualify for. There is an enormous difference between how much you qualify for, and how much you’re comfortable spending each month for your mortgage. Your lender can tell you how much money the bank will lend you. But only the buyer can decide if it’s too much for their comfort zone. No one should be house poor.
Step 2: decide how much money you would like to put down.
You don’t need to put 20% down to buy a home; it’s a myth.
Most people have been taught to believe that putting 20% down on a home is the best way to purchase a home. The truth is it might be, and it might not be. It depends on a lot of different variables.
Remember no two loans are the same. One thing is true if you take your monthly payment plus your down payment, you will know exactly how much purchase power you will have. This will make looking for a home much easier.
Step 3 choosing the best lender.
This is a critical step. Not all lenders are created equal. The wrong lender may actually cost you your home. Most people don’t really understand the nuances and the regulations that have made obtaining a loan so challenging in 2016. It’s kind of like cell phones they promise everything and deliver nothing. It’s all about control. The more control you have the easier the loan process will be. My strongest recommendation is to use a direct lender. Traditional banks have very poor track records of completing transactions in a timely manner. Mortgage brokers can be a night mare. They have little to no control over the loan. A direct lender is your best option, because they are very stream lined. The only things they do are mortgages.
Step 4: The purchase price:
Now you are ready to determine your purchase price. Now your lender can assist you. Based on the down payment and how much you would like, and your monthly payment to be, you will know exactly how much home you can comfortably afford. I call it: Determining your purchase power.
Step 5: Determine what features your new home must have.
This is the next and final step. Create a list of the top 10 features you would like your home to have.
You should start from the most important to the least important. There is no such thing as a perfect home. It doesn’t exist, so don’t look for it. You should decide what features are absolute deal breakers and which features would be nice. If you find a home with 7 out of 10 you probably found your home!
Now that you have done all the preliminary steps that are necessary to start the home-buying process, you should feel much more confident and prepared to start looking for your new home.