Becoming a home owner isn’t as easy as it looks. There are several steps that need to be taken into consideration before even starting your first home purchasing journey. However, if you educate yourself on everything that comes with buying and financing a new home, you will save yourself from making a big mistake later.

Here are 5 things you need to know before you begin looking for your dream home:
  1. Get pre-qualified. Sit down with a Mortgage Specialist to go over your financial situation. A Mortgage Specialist will ask questions to determine your buying power. They will evaluate your income and compare it ­to your debt. You will be asked to provide proof of your income, asset information and current monthly expenses. With this information your Mortgage Specialist will determine what kind of home you can comfortably afford and with a pre-qualification you will know the specific loan amount you are approved for. Having a pre-qualification makes you attractive to sellers because it shows that you are serious about purchasing a home.
  2. Check your credit score. You credit score is vital when acquiring a mortgage loan for a home.
    If you have had trouble with paying bills in the past, this could cause challenges. Your previous credit history will affect your current buying power. The better your credit, the less risky you look to borrow and your interest rate on your loan will be lower. Don’t be worried, if you have not so perfect credit; you still have options. Speak to your Mortgage Specialist about all of the options available to you. They can help you decide what mortgage is best for you and determine which one you qualify for based on your credit history. Be prepared to have your credit run at your pre-qualification meeting.

  3. Know your options. Educate yourself on all the different types of loans that are available. You can learn about these loan options from your Mortgage Specialist, they will find a mortgage loan that will make you feel comfortable. Some different mortgage options include a fixed rate mortgage (with fixed interest rates and terms) and an adjustable rate mortgage (that vary in terms and interest rates). You may also be eligible for local, state and national home buyer grants and assistance programs (ask your Mortgage Specialist). Knowing what you can financially afford and what you may qualify for will make choosing a loan much easier.

  4. Determine your down payment. There are numerous factors to consider when determining your down payment. Are you comfortable paying in one lump sum? Do you have other expenses you may need to dip into your savings for? Will you feel secure being left with very little in your savings account? Whatever you decide, the amount of your down payment will affect several things including the price of the home you are hunting for and whether you will need to pay additional PMI (Private Mortgage Insurance) payments. If you have not been able to save a minimum down payment, you should ask yourself if you are financially ready to purchase a home.

  5. List your needs and wants. After you’ve been pre-qualified and educated yourself on all the different mortgages and financial necessities needed to get a mortgage, you can now draw out your home wish list. Decide what you desire in a home and what you can’t live without. Pick things that you must have versus what you may want. Decide on things like large square footage, wood floors, age of the home, backyard size, pool, fully finished basement and more! When you know exactly what you are looking for and what you will be able to live without, it will be much easier to look for a home without wasting time.
Now that you are a more informed on what is expected when buying your first home, decide if you want to talk specifics with a Mortgage Specialist you can depend on to help you through the entire process. Call us today at 708-364-2525. We can help you determine what kind of home you can afford and what loan will work best for you!