Whether you are a first-time homebuyer, looking to trade up or downsize your current home, the homebuying process can often be intimidating. Here’s three things to consider to help you plan for your homebuying quest.
1. Be a smart shopper. Begin your homebuying hunt by knowing how much you can afford. How do you determine what you can afford?
• Prepare a budget.Create a list of your monthly expenses. Be sure to include any current recurring debt, entertainment expense, commuting cost. Pro tip: This is a great time to ask yourself if there are any items you can cut out to reduce your monthly expenses. Take this time to review your cable and phone plan, check your insurance bill, find cost effective ways to doing the things you do regularly – like brewing your own coffee.
• Meet with a Mortgage Loan Officer. A Mortgage Loan officer can help you determine how much home you qualify for. While the Loan Officer can get you a loan for more than you thought you could afford, that does not mean it is what you would feel comfortable paying each month. This is where you could consider the budget you created. While your Loan Officer will review your income and credit statements he or she will not be able to account for your lifestyle expenses paid in cash, or credit cards that get paid off each month.
2. Determine the best mortgage product for your needs.Work with your Loan Officer to determine the best mortgage product for your unique situation. Your Loan Officer should ask you questions like how long you plan on being in your home and how much money you’re looking to put towards the down payment. The answers to these questions will help determine the best mortgage product for your needs.
• Thinking about how long do you plan on staying in the home can help determine if an Adjustable Rate Mortgage (ARM) makes more sense than a fixed rate mortgage. Often times ARM’s provide a lower rate due to the shorter mortgage terms.
• A down payment is an important consideration when considering a home loan. Your Loan Officer will be able to talk you through different products based on what you feel comfortable having for a down payment.
3. Location, Location, Location. Check out and target a neighborhood.
• Visit your targeted neighborhood on several occasions at different times and days of the week. A neighborhood that is quiet Tuesday at 2:00 pm maybe noisy and traffic filled on a Saturday at 11:00 am.
• Plan a practice weekday commute from your targeted neighborhood. Leave the targeted neighborhood the same time you leave your current home. Is the commute longer or shorter is it something you can live with? It might be short as far as distance but traffic patterns may double your commute time.
• How are the schools in the neighborhood? Even if you do not have school aged children, the schools that serve your neighborhood can affect the home’s resale value.
• What surrounds the immediate area of the house? There may be a nice tree lined border in the back yard during the spring and summer months but in fall you may find out that the house is behind an Industrial complex.
• What are the future plans for the surrounding area? Check with the City or County planning or zoning board. Will a major highway be planed to cut across your back yard? The more information you have on the location, the more informed decision you can make on your future home.
While the list of considerations above should help begin the conversation about your future move, I would highly recommend meeting with a Mortgage Loan Officer who can help you plan and put you in touch with the right industry professionals to make your move as smooth as possible. If any red flags come up through your consolation, you have the opportunity to plan accordingly before your move.