Buying a home is an exciting but often overwhelming experience, particularly if you are buying your first home. As your REALTOR® and trusted advisor, it is our job to walk you through the home-buying process and assure that you find the right home for you, at the right price for you.
All homebuyers have a number of concerns, all of which we will be happy to discuss with you. We have found that by discussing your concerns up front and setting expectations as to the homebuying process, we can help to ease your fears and make the home-buying process fun.
Setting a Time Frame
There are a lot of variables in the home-buying process, which means the time it takes to find and buy your new home varies as well. A typical home search process may take three to four months, including the mortgage approval process, comparing and evaluating properties, making an offer and working through the closing process. The loan process typically takes 30-45 days.
The Lending Process
Perhaps one of the most intimidating aspects of buying a home is the mortgage approval process. We will be here to help guide you through this, but there are many ways you can prepare early to make the process smoother. Start by making sure that you are in control of your budget. Make a list of all your monthly expenses, compare it with your income, and determine where your comfort level would be in terms of a monthly payment for your new home. Keep in mind that your comfort level and what you can qualify for in terms of a payment are not always the same. Start gathering documents your lender will eventually need such as W-2 forms, income tax returns for the past two years, your most recent pay stubs, records of child support or alimony, bank statements for the past several months verifying your assets. It is also a good idea to have an idea of your current credit standing. The next step before beginning to shop for your new home is speak with a mortgage lender and get a pre-approval based upon your income, your assets, and your credit rating. By doing this up-front before "shopping" for your new home, you will be able to begin the process knowing the price point of homes in which you will qualify. Another benefit for a pre-approval before submitting an offer is that it is ready to go and can be presented with the offer when you find the home for you. Sellers generally like to see a pre-approval letter from buyers presenting offers on their home as it allows them to gauge the seriousness of the offer as well as the buyer. Once you are "under contract" on your new home, your lender will guide you through the remainder of the process. One thing to keep in mind is that you will need a down payment on your new home, generally ranging anywhere from 3.5% to 5% of the purchase price of the home.
Determining How Much You Can Afford
A general guideline to consider is that most buyers purchase a home that costs about one and a half to two and half times their current annual income. For example, someone earning $50,000 a year might purchase a home for $75,000 to $125,000. Mortgage payments should be about 26-28 percent of your gross monthly income. Existing debt is also considered in the mortgage process, and total debt payments (car payments, credit cards, student loans, etc.) should not exceed 40 percent of your gross monthly income.
Finding a Home That Meets Your Needs and Wants
Before you start looking at properties, make a list of "must-have" features along with optional features you would like to have in your new home. "Must-have" features may include the number of bedrooms and bathrooms you will need to accommodate your family, location (consider commute to work, which schools your children will attend, etc.), lot size and special needs (handicapped access, etc.). Optional features may include the architectural styling, bay windows, landscaping, etc. Having a clear idea of what you want in a home will help us to find the perfect property for you.
Educating yourself about the home-buying process is key to getting a home you love and can afford. As your REALTOR® and trusted advisor, we are here to answer any questions you might have and guide you through this process.