Only Look at Homes You Can Afford
When it comes time to find a new home or your very first home the very first thing you need to do is find out how much home you can really afford.
Talk to a lender first, they can give you a good idea of how much you can finance and you know how much cash you have to put down on a home.
Do not forget the fact that you will need cash to pay for closing costs.
You can ask the seller to pay for the closing costs so that you can have less cash expenses but that will likely raise the contract price since it gives the seller less at closing.
You might wonder why you should do this first if you think you know about how much you can afford but as a realtor I can tell you that it is frustrating for both the buyer and their agent if you have not already pre-qualified to find out what you can afford.
I spend countless hours taking buyers out all over the place looking at homes that the buyer can not afford to buy, not now and probably not for a long time.
Beside the fact that you have wasted your own time, that of your agents but what about the sellers that have made sure the home was ready to show.
Why would you want to spend all that time looking at homes you might fall in love with just to find out you cannot afford them? Lenders are tougher than ever these days since the mortgage crisis and all the foreclosures going on.
They will dig deeper into your debt to income ratio, your credit score, your reserve money and other financial issues you could have.
Be prepared to answer a lot of questions as well as provide a lot of documentation to the lender, including additional documentation right before you close.
Some people who are well qualified take offense to this but do not feel that way, they have to scrutinize everyone equally, regardless of how well qualified you know you are.
Once you really know the dollar amount that you are qualified to buy and you are sure you would be comfortable for a long time with the amount of payments your mortgage will be then start looking for home in that price range.
Naturally, you can look a little higher since you will likely be negotiating on the home but do not get carried away.
I have people who insist on looking almost fifty thousand dollars more than their maximum, that is a waste of everyone's time.
Talk to a lender first, they can give you a good idea of how much you can finance and you know how much cash you have to put down on a home.
Do not forget the fact that you will need cash to pay for closing costs.
You can ask the seller to pay for the closing costs so that you can have less cash expenses but that will likely raise the contract price since it gives the seller less at closing.
You might wonder why you should do this first if you think you know about how much you can afford but as a realtor I can tell you that it is frustrating for both the buyer and their agent if you have not already pre-qualified to find out what you can afford.
I spend countless hours taking buyers out all over the place looking at homes that the buyer can not afford to buy, not now and probably not for a long time.
Beside the fact that you have wasted your own time, that of your agents but what about the sellers that have made sure the home was ready to show.
Why would you want to spend all that time looking at homes you might fall in love with just to find out you cannot afford them? Lenders are tougher than ever these days since the mortgage crisis and all the foreclosures going on.
They will dig deeper into your debt to income ratio, your credit score, your reserve money and other financial issues you could have.
Be prepared to answer a lot of questions as well as provide a lot of documentation to the lender, including additional documentation right before you close.
Some people who are well qualified take offense to this but do not feel that way, they have to scrutinize everyone equally, regardless of how well qualified you know you are.
Once you really know the dollar amount that you are qualified to buy and you are sure you would be comfortable for a long time with the amount of payments your mortgage will be then start looking for home in that price range.
Naturally, you can look a little higher since you will likely be negotiating on the home but do not get carried away.
I have people who insist on looking almost fifty thousand dollars more than their maximum, that is a waste of everyone's time.