7. Gather your loan paperwork
Before you’re approved for a mortgage, your lender will ask you for financial
records to verify your income, assets and debt, including:
Proof of income and employment, such as tax returns, W-2s and 1099s.
Statements for bank, retirement and brokerage accounts.
Records of debt payments, such as student loans, auto loans or any
real estate debt.
Documentation of other events that impact your finances, such as
divorce, bankruptcy or foreclosure.
Pull these documents ahead of time to stay organized throughout the process
— you’ll need them for a mortgage preapproval as well as when you apply for
the loan.
8. Get a preapproval letter
A mortgage preapproval is a lender's offer to loan you a certain amount under
specific terms. Having a preapproval letter shows home sellers and real estate
agents that you're a serious buyer and can give you an edge over home
shoppers who haven’t taken this step yet.
Apply for preapproval when you're ready to start home shopping. A lender will
pull your credit and review the documents you organized in the previous step.
Applying for preapproval from more than one lender to shop rates shouldn't
hurt your credit score as long as you apply for them within a limited time
frame, such as 30 days.
9. Choose a real estate agent carefully
A good real estate agent will scour the market for homes that meet your
needs and guide you through the negotiation and closing processes. Get
agent referrals from other recent home buyers. Interview at least a few agents
and request references. When speaking with potential agents, ask about their
experience helping first-time home buyers in your market and how they plan
to help you find a home. You might also ask how they find homes that aren't
yet on the market, which can be a handy skill when buyer competition is
fierce.
10. Narrow down your ideal type of house and neighborhood
Weigh the pros and cons of different types of homes, given your lifestyle and
budget.
An existing home generally costs less than buying a new construction
home. But if local inventory is low and you have the means, a brand-
new home offers enticing options to customize.
A condominium or townhome may be more affordable than a single-
family home, but shared walls with neighbors will mean less privacy.
Don't forget to budget for homeowners association fees when shopping
for condos and townhomes, or houses in planned or gated communities.
A manufactured home, including the type commonly called a mobile
home, can be an affordable option if you have a tight budget. You’ll
need to title it as real property and affix it to a permanent foundation if
you want to finance it with a traditional mortgage. Many manufactured
homes are financed through chattel loans, which have higher interest
rates than mortgages.
Fixer-uppers, or single-family homes in need of updates or repairs,
usually sell for less per square foot than move-in-ready homes.
However, you may need to budget extra for repairs and remodeling.
Renovation mortgages finance both the home price and the cost of
improvements in one loan.
Think about your long-term needs and whether a starter home or forever
home will meet them best. If you plan to start or expand your family, it may
make sense to buy a home with extra room to grow.
Research potential neighborhoods thoroughly, including property values,
property taxes and safety considerations. Choose one with amenities that are
important to you, including schools and entertainment options. If you work
away from home, test out the commute during rush hour.
11. Stick to your budget
To avoid financial stress down the road, set a price range based on your
budget — and then stick to it.
A lender may offer to loan you more than what is comfortably affordable, or
you may feel pressure to spend outside your comfort zone to beat another
buyer’s offer in a bidding war.
In a competitive market, consider looking at properties below your price limit
to give some wiggle room for bidding. In a buyers market, you may be able to
view homes a bit above your limit. Your real estate agent can suggest a range
for your offering price.
If you get to this step and haven’t given me a call yet, do so now! We need to get out
and start looking at homes.
Mary Cockburn
505-639-2090
MaryCockburn.Realtor@gmail.com
