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Buying a home can be a confusing experience. There
are a few steps that can make this process easier.
1. Determine if buying a home is in your best interest
2. Get pre-qualified or pre-approved for a mortgage
3. Find a Realtor® and look for a home
4. Prepare an offer
5. Secure your loan
6. Close the deal and move in
Step 1. Determine If Buying a Home
is in Your Best Interest
Before you begin the home buying process, it is
a good idea to analyze your needs.
Personal reasons to buy?
You may need to live closer to work or school. Perhaps
your family has grown out of your current home? Make a list of your
personal housing need having a list is a good way to help you think
through tough decisions, especially one that will have such a financial
commitment. |
Will you be satisfied having a 3-bedroom home or
will you not settle until you have that 4th? Must your backyard
have a swimming pool or do you desire lush greenery for your kids
to run around? Does this home have to be close to the city where
you work or are you willing to commute? All of these questions have
to be answered when you decide on which home you will buy.
Make sure to consider:
- What features must the home have in order for
you to purchase it?
- Which features are just nice to have?
- Will this same criteria be important to you in
a couple years?
- What are your reasons for looking for a new home?
- Will having the new house solve any current problems?
Make sure that when you answer these questions,
you are completely honest with yourself. You are the one that has
to make the decision, and only you know if and where you would be
better off.
Step 2. Get Pre-Qualified
The next step is to get pre-qualified for a loan.
Most Realtors® and sellers need to know that you are able to
get a mortgage before they invest their time in you. Getting pre-qualified
for a mortgage lets you know how much you can afford and makes you
aware of your current credit and any errors that can be fixed on
your credit report. Getting pre-qualified also tells Realtors® and sellers that you are a serious buyer.
When you contact a lender to pre-qualify, they will
ask you to provide some personal information. Most lenders will
even request documentation to verify the information that you provided.
In most cases, the lender will ask to see the originals of each
of these documents:
- Current pay stub (within last 30 days)
- Last two years’ W-2 forms
- Social Security number
- Drivers license number
- All savings account balances
- List of all debts Schedule of all real estate
owned
- Tax returns (and current profit and loss statements,
if self employed)
Budgeting to buy
When you want to buy a home, estimate what you can
afford and start to budget accordingly. If you are having trouble
coming up with money for a down payment, there are a few strategies
you can use. Start by writing down your monthly income and your
fixed expenses, then, set aside a percentage for savings and a set
amount to spend on extras.
Identify all of your long-term financial
goals
Like most people, you may have long-term financial goals, like owning
a home, taking nice vacations, or a comfortable retirement. Whatever
your financial goals, you can be certain they will require money.
Make a long-term savings plan
For all of your long-term goals, open a separate savings account.
Make deposits on a regular basis, and promise not to touch that
money. If all you can afford to deposit is $20, it is better than
nothing because $20 adds up a lot quicker than $0.00.
Make a savings chart
Keep track of your progress daily. Whether you chart it on a piece
of paper or poster board, just make sure you keep it where it is
visible each and every day to remind you of your progress and your
ultimate goal.
Other options for making money:
1. Have a garage sale
2. Sell an extra car, boat or other toys you may have.
3. Get a second job (this may even help you qualify for a loan)
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