If you have been dreaming of buying your first home, doing so will be a big accomplishment for you. You may not be prepared for the stressful process of purchasing a home since you've never done it before. That's why you should follow these 2 tips to help things go smoothly and guide the decision-making process.
Get A Mortgage Pre-Approval
You may have heard about being pre-qualified and pre-approved for a mortgage, but you might not be sure what the differences are and even may have used the terms interchangeably. They are two very different things. Being pre-qualified means that your lender believes you are a good loan candidate based on the basic information that they have, and they use this to give you a general figure for what your loan amount could actually be.
A mortgage pre-approval is much more involved than a pre-qualification. Your lender will have reviewed all the financial information that you provided, sent this information to a mortgage underwriter, and approved a mortgage for a specific amount of money at a current interest rate.
Having a mortgage pre-approval is beneficial for several reasons. You can be sure that the funding to purchase a home will be available to you if you need it, it lets you know how big of a home you can buy, and it puts you in a better position if there are multiple offers on a property. If a seller is between two offers, and one of them does not have a mortgage pre-approval, they may decide to go with a buyer that has taken more steps to secure financing.
Be Realistic In Your Home Selection
You may be pre-approved for an expensive home, but it is beyond your means? Having a low debt-to-income ratio could mean that your mortgage lender is willing to give you more money than you are prepared to spend. Don't make the mistake of buying a home that is too big for this stage of your life, with mortgage payments that are too high.
Realize that the first home you buy is most likely not going to be the home that you stay in forever. The average first-time homebuyer stays in their house for 11 ½ years. For homeowners that have previously owned a home, it increases to 15 years. Know that you can stick to a home that is smaller and cheaper, because you may not outgrow it until over a decade from the time you purchase it.
With your expectations in check, consider working with a real estate agent that can find a home that is right for you and click for more information.