Purchasing a home is quite possibly the largest purchase you
will make in your lifetime. Like most
people, when I decided I was ready to purchase a new home, I began by trolling
the internet and fell in love - home
after home. I watched video tour after video
tour and imagined how I would decorate each room. I utilized the online mortgage calculator to
estimate my payment and then hastily contacted the first realtor who picked up
the phone so that I could run out the door as fast as possible to preview my
new dream home. The first words out of
my realtor’s mouth were “have you been pre-qualified?” It was at that exact moment that I panicked
and thought to myself, am I ready to buy a home? If you have ever felt this way then you need to ask yourself the following
questions: How do I start the process?
The first place to start determining if you are ready to purchase a home is
to determine your budget. The mortgage
lender will use your gross monthly income (the income you receive prior to
deductions such as taxes, medical insurance, 401K) to determine how much you
qualify for. However, since we live on our net income (income you received post
taxes, insurance, retirement…) it’s important to create a budget for yourself
by first outlining the amount of money
you spend on all of your liabilities such as car payments, credit card bills,
student loans. You also need to calculate how much money you spend on
groceries, eating out, leisure activities, gas, car maintenance etc.. Make sure you build in a buffer to account
for home maintenance and utilities.
How much you would feel comfortable paying for a mortgage each month?
Keep in mind, many online
mortgage calculators do not include property taxes and homeowner’s insurance. These items are integral parts of your
monthly payment. Click here for a great calculator to help you determine whether buying or renting is right for you.
How long you want to live in this house?
What is your 5 year, 15 year and 20 year
plan? Do you plan to have children while
living in this home? Evaluating your long term goals will help you
make an educated decision on the type of house your want to purchase.
At this point in my home buying process, I realized I had
made a lengthy list of questions that needed answering. Who do I call? Who can I trust? Are you ready for the answer? Are you sitting down? Your next phone call should be to a
qualified, educated and experienced mortgage lender. The right mortgage lender can help you
identify your goals and create a plan to reach them.
Most of us think of our mortgage as simply
the largest debt we carry. Your mortgage
lender will be able to show you ways to utilize your mortgage to save for
retirement, and pay for college, but
most importantly, your mortgage lender should be an individual that you create
a lifetime relationship with. [Be sure
to ask what they will do for you after your mortgage closes. Will they provide
you with a quarterly or annual mortgage analysis?
Take the time for goal setting, self-reflection, connecting
with a qualified mortgage lender and most importantly— happy house hunting!
Click here for more information on mortgage planning or to request our guide to buying your next home.
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