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First Steps in Home Buying

Your landlord raised your rent, you are ready for more stability, you think you want to buy a house but you have no idea where to start.

1. First and foremost you need to come up with a budget and decide what you can afford. Make sure to include your down payment, mortgage, monthly assessments, taxes, utilities, and a rainy day fund for repairs in this calculation. With an FHA loan you can put as little as 3.5% down, but not all buildings will qualify for this type of financing. Putting 20% down is always a good rule of thumb, this also allows you to avoid paying Private Mortgage Insurance.

2. Part of deciding what you can afford is speaking with a Mortgage Broker and figuring out how big of loan you would be able to qualify for, all while keeping in mind the monthly mortgage amount that you can afford to pay. Your mortgage broker will also inform you that now is not the time to be moving around large sums of money or opening additional credit lines. When you apply for a mortgage they will take a deep dive in to your bank account and finances for the past 2 months, and two years of tax returns, so be prepared to explain anything out of the ordinary. Many brokers these days require proof of financing with an offer, so getting this out of the way before hand will allow you to move quickly on a deal when you find a property you like.

3. Once you have a price range in mind you will want to reach out to a licensed Realtor to help you in your search. Having a list of wants will help save you both time, though remember you may have to let a few things go. Unit size, neighborhood, parking or public transportation access, in unit laundry, flooring, finishes, views, and building type are all things you will want to discuss with your agent. From this step on your agent will be able to guide you in finding and purchasing your dream home.

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