Steps to Buying a Home
The process of buying a home doesn’t have to be stressful; that’s why we’re here. Whether you’re a first-time buyer or you’ve purchased a home before, we make the home buying process simple and easy to understand by working with you every step of the way to make sure you get a mortgage to fit your current financial situation and fulfill your future financial goals. When you’re ready to begin the home buying process, consider the below.
Plan Your Budget Accordingly
Realistically examine your current financial situation and future goals when you begin the home buying process. Answer the below questions to help determine if now is the right time for you to buy a home.
- Savings. Do you have enough money to make a down payment? Your down payment can affect how much your monthly mortgage payments will be; a larger down payment can mean lower monthly payments and more favorable terms overall. Do you have enough money saved to cover mortgage payments for a few months or more in case you lose your job, or have to pay for any emergency home repairs? Is your employment situation stable, uncertain, or unpredictable? Are you expecting a raise in the future?
- Spending. Are you disciplined enough to make all your home payments on time? Do you live within your means and have a household budget? Will you be able to prioritize monthly mortgage payments over other non-essential purchases? Figure out your debt-to-income ratio which is the amount of debt you have, which includes things like credit card bills, car loans, etc., compared to your income. You can calculate your debt-to-income ratio by adding up monthly debt payments and dividing them by gross monthly income.
- Commitment. Are you ready to make one of the most significant investments of your life? Are you ready for the responsibility of owning a home, and will you have the time to devote yourself to home maintenance and repair?
- Credit Score. What’s your credit score? Can your credit score be improved? Your credit score plays an important role in the rate you receive, how much loan you can afford, and the size of your monthly payments. The higher credit your score is, the more likely you’ll receive a lower interest rate during the home loan process.
Pick Home Features that Fit Your Needs
When you’re ready to start searching for homes, make a list of the features you want, compared to what you need. Decide what part of town you want to live in. Remember, things like paint or new carpet are easily changed before or after you move in. Look for features that are already part of the home’s construction and design. If you work with a real estate professional, knowing these things will help them narrow the search to find homes that fit your needs faster. Things to consider include:
- Home style and size: What floor plan, square footage, number of rooms, and how much garage space do you need? Are you looking for a single-family home, a condominium or a townhouse? What’s more important, a backyard for running around, or a small outdoor area to relax? Even these very different types of homes will have wide variety of options when it comes to space and design. Maintenance requirements are also different depending on a home’s age and style.
- Location: Is the home close to schools, shopping, entertainment, parks, and your job? How long is the travel time and distance to work? Is it close to areas of town important to you and your family? If you have children, is it in a good school district?
- Yard size and landscaping: Do you enjoy doing yard work, hosting outdoor parties, or do you need to have a pool?
- Remodeling: Do you want your home to be move-in ready, or are you open to buying a fixer-upper?
- Neighborhoods: Are the other homes in the area well-maintained? How’s the traffic, and congestion? Does the neighborhood offer the amenities important to you like shopping, recreation and other services?
Anticipate Your Monthly Payment
As part of the mortgage process, calculating your monthly payments include four parts: Principle, Interest, Taxes, and Insurance (PITI).
- Principal is the loan balance that is still owed, not including interest.
- Interest is the fee you pay a lender to borrow the money.
- Taxes and how much you pay are determined by your local government tax authority.
- Insurance on your home and property is required for all mortgages. Rates are set by your insurance provider.
Taxes and insurance are included in your monthly payment (PITI) if your mortgage is set up with an escrow account. If you choose to use an escrow account, the costs for these expenses are collected in small amounts and spread throughout the year. With an escrow account, you avoid making a large payment when filing your taxes or making multiple insurance payments throughout the year. If you choose not to use an escrow account, you are responsible for making tax and insurance payments on your own.
Mortgage Loan Process
Buying a home is one of the biggest financial transactions you’ll ever make. Understanding the loan process will help eliminate a lot of stress you may feel while going through the process.
Frequently Asked Questions
Get answers to commonly asked mortgage questions regarding loan programs and applications, rates, and other information related to the mortgage process. Unable to find what you are looking for? Please contact us, we’re here to help and are ready to assist with any of your questions.