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Decide to Buy and begin your pre-approval

We are going to discuss how to decide when to buy a home and how to begin the process with a pre-approval.

Make sure you are ready both financially and emotionally. Owning a home can be expensive in the short term but worth it in the long term, if you start with a financial plan. You can expect a 10-20% downpayment, closing costs, inspection fees, moving expenses, and expenses to get set up in your new home. Emotionally it can be a roller coaster with making offers depending on how the real estate market performs. Our current market conditions of homes moving quickly with multiple offers can get frustrating or overwhelming when the process moves rapidly. Taking time to focus on your finances will allow you to understand how much you need to save and how much you are comfortable spending for a home. Taking the time upfront to consider the emotions that can arise over the home buying period will help you prepare for your experience.

Determining your debt-to-income ratio is an essential factor in getting a mortgage. The 43% debt-to-income (DTI) ratio standard is generally used by the Federal Housing Administration (FHA) as a guideline for approving mortgages. This number will help frame your purchasing power as a buyer. You visiting with a lender before home shopping will inform your real estate agent of a price point. This allows you and your agent to assess the housing inventory to find specific options for consideration.

HIGHLIGHT: Getting approved for a mortgage up to a certain amount doesn’t mean you can afford the payments, be honest about your financial risk comfort level.

While lenders provide buyers with a price range, it is essential to consult with your real estate professional about other financial and lifestyle considerations. They can help look at the broader picture to know whether you can afford to buy a house. A down payment is typically around 10-20% of the home price, and when putting down more funds as a homeowner, you can reduce your monthly mortgage payment. All of these are factors to consider when selecting a price range. Most homebuyers understand the down payment concept, but that is not the only upfront expense when purchasing a home. In addition to the down payment, money must be allotted for costs associated with the loan, which generally run about 3% depending upon your lender and closing costs. As the name implies, provide your closing costs at the closing of the transaction, also known as settlement.

Your RE/MAX Capitol Properties Agent will help you understand the local real estate market, economic outlook, and other pertinent trends that may influence your home buying experience. A quick assessment to determine if buying a home is the best move for you helps to decide if it is more expensive to rent than to own a home. If it is more costly to rent, it is more worthwhile to own your home and build equity. Buying a property is typically a safe long-term investment. Suppose you are purchasing the property on the belief that it will rise in value over time, be sure to factor in the cost of interest payments on your mortgage. Also, consider upgrades to the property and ongoing routine maintenance into your calculations. Over time, the prices of homes can help provide buyers a perspective on whether it is an excellent time to buy. Data can tell us if there is an economic downturn resulting in reduced housing prices. It is a prime time to buy; with a housing market with limited supply, it is vital to have a crucial negotiator on your team to ensure you are getting the best value in the competitive market. Another motivator to buy is low-interest payments. Purchasing your home in an environment with low-interest rates can lead to long-term success in gaining equity at a faster pace as a homeowner.

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