One excellent way to improve your financial profile is to buy a home of your own. But we won’t lie: It’s a long and potentially incredibly stressful process, especially when it comes to the dollars and cents of securing a mortgage loan.
So how do you navigate the stress of the journey in order to reach Destination Homeowner? There’s a lot that’s within your control to help ease some of that stress and make the whole thing a little bit easier. If you take a few steps upfront to manage the financial details early, you’ll thank yourself on moving day.
Get pre-approved for a mortgageGetting your mortgage loan is arguably the most labor-intensive aspect of buying a home. You’ll have to submit documents that show your:
A mortgage pre-approval is much more involved than its lighter cousin, the mortgage pre-qualification. A pre-approval will help you understand exactly how your new home will fit into your finances and whether you can even afford the house you’re currently touring. Some buyers make the mistake of getting pre-qualified for a mortgage, making an offer on a house they love – and then discovering once they submit all their paperwork that they can’t actually get a loan for that amount.
Pick the best mortgage for your situationAll mortgages will help you buy a home, but not all mortgages are created equal when it comes to your own personal financial profile.
Save as much as you canEven if you’re securing a low-down-payment or no-down-payment mortgage, you should still expect some out-of-pocket costs that you’ll have to shoulder before you can start paying a mortgage instead of rent. Depending on the sales contract, buyers will likely have to pay for the appraiser and the inspector to look at the house and (respectively) appraise and inspect it. A seller might request earnest money in order to accept an offer, so buyers will have to provide that.
Research before you bidIf you’ve found a home that could be yours and you’re ready to make a bid, stop and think before you decide on a number.Offering the seller’s asking price may seem a perfectly safe move to make (and it might be), but how will you feel when you learn that most sellers in the area are negotiating down from their listing price? (Here’s how you’ll feel: Like you left several thousand perfectly good dollars on the table that could have been yours).Offering less than asking price could also be considered a safe move in some markets, but in others, you might have priced yourself out of consideration from the opening bid.A good real estate agent can explain your local market trends and help you come up with a bid that works with your budget and will be seen as serious and competitive by the seller. Agents can show you whether houses in the area have been selling for below or above the asking price and can help you find that sweet spot where both you and the seller are happy with the deal.