Buying a home: What you need to consider

Is it in the right neighborhood? Is the mortgage at the best rate? Will this be a temporary home or could your family grow in it?

All of these are essential components that go into making the perfect choice, not only for you but for your family. 

For most people, the purchase of a home is the single most important investment of their lives.  However, It can also be one of the most complicated journeys someone can take. 

Here are some tips to guide you through your home buying experience:

1) Should You Rent Or Buy A Home?

When it comes to deciding whether or not you should rent or buy a home, you first have to look at your finances. Are the mortgage rates in your market comparable to what you'd be paying for rent? Would you be able to afford the home purchase and any home repairs the home might require?  There are different ways to see it. In some real estate markets, the price of rent is similar to mortgage payments, and with steady rates like today, there is no better to own your own! The upside to being a homeowner is the power to accumulate wealth and equity with each payment. 

Which is the right option for you?

2) Be Mortgage Ready

There is a big difference between being pre-approved and being fully underwritten for a loan. A pre-approval is a commitment in writing from a lender that a borrower would qualify for a particular loan amount based on income and credit information. Having the loan means that you have secured the funds necessary to purchase a home. Most pre-approval letters are good for 60 to 90 days. Why be mortgage-ready? When you are fully approved, you can gain a competitive advantage and be in a stronger position to negotiate with sellers, getting you one step closer to definitively closing on your new home. Usually, your realtor will be able to recommend a couple of lenders for you if you don't have chosen one yet.

Are you Mortgage ready?

How to get prepared:

Documents you'll need to provide to get a mortgage pre-approval

• Your W2 from the past two years

• Your pay stubs for the past three months

• Your tax returns from the past two years

• Your checking or savings bank statements for the past three months (this will likely have your down payment funds in them as well)

• Your statements for all your other assets (stocks, bonds, retirement accounts) for the last two months

• The name and phone number of your landlord (if you are renting) or your current mortgage documents

• Your divorce decree, if applicable

• If you are self-employed: Your business tax returns for the past two years in addition to your year-to-date profit and loss statement and year-to-date balance sheet

• Be realistic about what you can afford

• Prepare a personal budget

• Consider your long-term real estate goals

• Meet with a mortgage advisor

3) Location, Location, Location

When it comes to location, many factors can influence where you want to purchase a home. From school district, proximity to shopping and dining to neighborhood vibes. These factors are essential to consider because when making any home purchase decisions. A helpful tip would be to make a list of the elements most important to you in a neighborhood and then to look for a home located in or around your choices.

What's your ideal location?

4) Condition

A home's first impression will emotionally influence your evaluation process. Often the right house will be overlooked because of cosmetics. Don't let a simple and quickly resolved cosmetic problem hold you back from making a choice that would be right for you. This is why a pre-home inspection is perfect for some people. If the neighborhood fits your needs and the price is right, book a home inspector or contractor to go over repair methods and costs. Repairs can also be a tremendous leveraging tool when it comes to either negotiating the price of the home or having the current homeowner fix before you move in. 

What are your thoughts on home improvements?

5) Is The Price Right?

Is the price right? There are two things to consider when judging the value of a home. 

1. How does the price compare to similar nearby homes that have sold recently?

2. What value do you place on the advertised features and amenities?

Deciding whether an asking price is fair will be important when you're ready to make an offer on the house. It will be even more critical when your mortgage lender hires an appraiser to determine whether the house is worth the loan you're after. Make sure you have done the research necessary before reaching out to your mortgage lender. When thinking if a home price is fair, don't just consider other comparable homes sold in recent homes. Take into account home amenities, location, size and age of the house. Question anything that's not clear. Make not only a strategic offer on a home but an educated one.

Purchasing a home can be one of life's most rewarding moments, but it also comes with its fair share of uncertainty and doubt. Surround yourself with a knowledgeable Realtor who doesn't just care about their next commission check, but that the choice that their client is making is right for them. Remember, this could either be the home of your dreams or one that keeps you up at night. Make the best choice you can.

What not to do:

• Change jobs, become self-employed or quit your job.

• Get a car loan or add another large debt during the transaction process.

• Use credit cards excessively or let current accounts fall behind.

• Spend the money you have set aside for closing.

• Add any additional inquiries into your credit.

Have any questions/comments? Simply e-mail me or leave a comment on the post.