Purchasing a home can be an exciting adventure, but like everything in life, there are some simple Dos and Don’ts you should always follow to ensure your homebuying experience is as smooth as possible.
DO Check Your Financial Background
Before you even think about purchasing a home, do you know where you stand financially? Are you employed and have been for a consistent amount of time, or do you have gaps in your employment history? Do you have a sizeable amount saved for a down payment, or is your bank account empty? Doing a quick analysis of your financial situation can save you time and stress in the long run, especially if this exercise reveals that buying a home just isn’t the best decision at the current moment. Make sure to check your credit score too and see where you roughly stand, as the absolute minimum you will need is a 580 FICO score.
DON’T Be Driven By Emotion
Purchasing a home, especially your first home, is a deeply emotional and personal experience that will drastically impact your life. When shopping for houses, it can be quite easy to let your emotions take over your rational thinking and warp your view of what you want, need, and like. Find the “perfect” home but it’s a one hour commute to work one way, even though you told yourself you wanted a 20 minute commute at most? Always take a step back and weigh whether or not the sacrifices you’ll have to make are truly worth it. Furthermore, don’t let the perfect home cloud your financial boundaries. If it’s pushing the maximum of what you can afford, it might be best to find a home that you still like a little less, but is more in line with your budget.
DO Get Preapproved For a Mortgage
When purchasing a home, many potential buyers get excited and immediately call a real estate agent. Quite often, this results in confusion as the budget the borrower wants is far off from what they can actually afford. A preapproval is a formal analysis of your financial situation, and is done by a mortgage broker such as Petra Cephas. We’ll give you a detailed overview of how much house you can afford, how much your monthly payment will be, and more. By doing so, you gain a better understanding of the price range you should be looking for. This also helps your realtor find the best home for you, and shows them and any potential sellers that you’re serious about purchasing a house (which will put you at a major leg up against any other potential buyers)!
DON’T Make Large Purchases
If you’re thinking of taking the next step forward and purchasing a home, you’ll need to take a step back financially and make sure that no rash spending decisions are made. This means any large credit card purchases should be avoided; you shouldn’t buy a car or make any other financial moves that would drastically affect your overall financial health. It also means you can’t accept large monetary gifts that can’t be sourced. Your lender will double check your debt before you officially close, and any significant increase in your debt load between when the offer was accepted and closing can lead to your mortgage being denied outright. You don’t need to live off rice and beans and ramen noodles during the mortgage process to get accepted, but maybe just wait a few months before charging that sweet new TV on your credit card!
Do you have any other questions about the Dos and Don’ts of homebuying? Call us today at 732-873-1365 and we’ll be happy to answer them.