Where To Start
The initial process of a home search can be a somewhat overwhelming task. Perhaps the biggest question many first time homebuyers have is “Where do start”? Some people begin by looking at real estate magazines or websites, while others call real estate agents right off the bat. The process varies.
So, what is the best way to begin your quest for a new home? In truth, any way you begin the process is a good way, because the most important thing is to get started. After all, you will learn a lot as you go. But there are some things to keep in mind:
Doing the Research
Buying real estate can be an overwhelming experience for the first-time buyer. But you can make the process much easier simply by understanding it. Start with being educated, especially the terms. Making better decisions associated with home buying and mortgages becomes easier if the knowledge is there.
Setting Your Budget
Determining the mortgage you can afford, and getting approved for it is the best way to begin looking for a home. First sit down with a mortgage lender to make these determinations. Remember, there is a big difference between the loan amount you can be approved for and what you can actually afford. So in the end, only you can determine your home buying budget — not a mortgage lender.
When dealing with a mortgage lender you will want to provide him or her with an understanding of what mortgage payment you are comfortable making so they can give you a sense of the size of the mortgage that equates to, based on your credit, income and other factors.
Looking at homes that are well above your budget is a big waste of time. Taking this step of talking to a mortgage representative will help “frame” your home search so you are only looking at homes within your budget range. Many first time homebuyers fail to take this step and therefore waste time and energy looking at homes that are well above their budget.
You can use the mortgage calculator offered on our site. This tool is a good place to start when determining your budget. Just keep in mind that the one variable you can never predict in advance is the interest rate. Only by speaking to a martgage representative can you get a full mortgage quote that includes the interest rate (based on your credit history).
Get Pre-Approved for a Mortgage
When making an offer on a home, also submitting the pre-approval letter gives the seller the confidence that you can buy their home, which is especially important for homes where more than one buyer makes an offer. Pre-qualification should not be confused with pre-approval. Pre-qualification is an informal process in which the lender tells you how much of a mortgage you might qualify for, done with the verbal communication. Pre-approval, on the other hand, is a more formal review of your financial situation and credit history and is likely to reflect the actual loan amount the lenders extends to you. The person selling the home will pay more attention to the pre-approval letter.
Envision all the possibilities when visiting each property by keeping an open mind. Meeting with a mortgage lender first may be the best way to begin your search and find your dream home. Staying realistic about your finances and doing your best not to over-extend yourself by purchasing a home beyond your means will make the future a brighter place.