Once you decide the time might be ready to buy a house, there are many things to consider. What area do you want to buy in? How big does the house need to be? Do you want a place that is loaded with DIY projects or you don’t even know where Lowes is? These are only a few questions that may need to be discussed before diving in. The one thing that is a must, is once you move forward to choosing a home, be prepared with your mortgage lender.
You ask why? Imagine that you start looking at homes. You feel like you have good credit, you pay your bills, and have a good job. Currently, you are renting or bought a home 7 years ago and pay $1500 per month. Keep in mind, over the last 7 years, home values have increased as well as interest rates. You tell your agent your budget for the new house is $300,000. Sounds reasonable. They provide you with a list of homes that meet your requirements, and the hunt begins. You begin visiting homes and trying to find just the perfect one. Ten houses later, you step in the one that pulls on the heart strings and checks all the boxes. It is perfect! Priced right and inside the budget, it’s contract time! The offer is accepted in good faith and you are buying your dream home.
Monday comes, and you call a mortgage company providing all the documents they need, W-2, bank statement, and paycheck stub. They perform a credit check and input all your income and debts. Voila, Congratulations you are approved for a home purchase of up to $275,000. But wait, the perfect dream house is contracted at $295,000. The contract is terminated, your option money is lost and it is time to start over.
This is a sad story, but unfortunately happens to so many people. Nobody wants to fall in love with something they can’t have. Although a pre-approval isn’t the final step of the financing process, it can help set your expectations. Finding the right real estate agent and lender is key to having a positive experience. Don’t be afraid of asking questions. Trust me when I say, they are going to ask you a ton of questions and won’t be shy about it. It is good to be mentally prepared for it. As an agent, it is my job to help you from step one to step one million.