Posted: January 03, 2018 at 12:00 AM by Anna Jotham
We just found out we’re expecting a baby this summer and we’d really like to buy a home before she’s here. Where do we start?
Congratulations! This is an exciting time full of anticipation. You have some planning to do.
Determine how much you can afford.
Start by taking inventory of your financial situation. Can you show that your employment situation is stable? Is your debt-to-income ratio reasonable? How much home you can afford?
Use a mortgage calculator to figure out what your monthly payments will be in a variety of scenarios. Kids can be expensive. Keep that monthly mortgage payment at about a quarter of your total take-home pay and be prepared for unexpected expenses involving home maintenance or children.
While we’re talking finances, take a look at your bank account. Do you have a down payment ready to go? Lenders generally require 20 percent down, but there are other types of loans, such as an FHA where the minimum down payment may be as low as 3.5 percent. Keep in mind also that there are other expenses involved in the home buying business: closing costs and moving costs are among them.
Get prequalified and preapproved for your mortgage loan.
Through getting prequalified and preapproved for your mortgage loan, you’ll learn about the loans and mortgage rates available to you and confirm how much you can spend, the mortgage terms you can get and more certainty that the lender will approve your loan. Further, preapproval gives you more leverage when you’re ready to make an offer on a home. Offers coming from prospective buyers who are preapproved are much safer and more attractive than offers coming from people who are not. That's especially important to remember when you may be competing with other buyers, which is common in today's real estate markets.
Find the right real estate agent
When you consider a real estate transaction involves 184 distinct steps, you don’t want to go it alone. A solid agent will serve as an important guide through every step and have your back throughout the process. Additionally, agents have the inside track on properties and can often show you homes before they even go on the market. They’re also skilled negotiators who can ensure you get the property you want at a fair price.
Shopping for a home
Now the fun begins; it’s time to start looking at houses! Let your agent know what you need, and remain true to your price range. House shopping is the best kind of shopping. Take notes on pros and cons as you walk through properties with your growing family in mind. Otherwise, after you see a few, they can start to blend together.
As you consider your options, ask yourself what kind of neighborhood is important for your family. Do you want to walk to school? Play in the woods? Run to a nearby park? While your first home may not be your forever home, you can think about early experiences you want for your child as you shop.
Get a home inspection
Once you find the home you think is right for you and make an offer, be sure it’s contingent upon the results of a home inspection. Few things are worse than sinking your nest egg into a home that you later learn has structural damage or flooding issues. When the inspection comes back, you can determine whether it makes sense for you to keep the offer where it is or ask the seller to repair those items before closing.
Once the offer is accepted, the home is appraised and inspected and the mortgage loan is structured and approve, it’s time to close and make your move. Keep in mind the entire process of purchasing a home can take several weeks, so start as soon as you can.
But once you have a qualified Realtor on your side, you can relax and have fun with the process. You are about to enter a new and amazing era of life. Slow down, look around and enjoy the ride.