When you are ready to purchase your next home, or even your first home, you should be prepared by knowing and understanding the lending process and what you need to do to make sure you are in the best financial place possible to make the leap. Having been a real estate agent for many years, I understand that the process of buying a home doesn't end when you find the perfect house.
If you are buying a home for the first time the first step is to ensure your financial readiness. This means saving a hefty down payment, but also understanding your finances enough to know how much you can comfortably afford and what type of mortgage works best for your situation. If you already own a home, knowing the difference between what you still owe on that property and what you were able to sell it for, minus real estate fees and other costs, represents your equity in the property and what you will have available as a down payment.
A home is a major investment, and choosing the best mortgage will help to ensure that that investment grows. The size and type of home you may want to purchase will be determined by the home loan you qualify for. The mortgage options and amounts available to you is based on a number of factors, but mainly:
- Credit history
- Available down payment
- Level of monthly income
- Current market and credit conditions
I also recommend getting a pre-approval prior to searching for a new home. A pre-approval will give you an idea of your financial health and what you can afford. It will also help when you do begin searching for a home, and are ready to make an offer. Having a pre-approval may give you the edge over other potential buyers.
In today's market, your ability to respond promptly and make an offer with a mortgage approval in your pocket is an important step in the buying process. Overall financing will be a large factor when buying your next or first home, so be prepared and get all your facts in order before you take the plunge.