If you are interested in beginning your home search, but you are either a first time home buyer, or someone who hasn’t bought a home in a while we want to shed some light on first steps and provide you with insight into the process. The very first step is to find a lender to work with. We have a couple of recommendations here.
Once you select a lender you will likely begin by filling out a loan application in order for your lender to be better able to understand your financial situation. You will answer a number of personal financial questions. The process might feel a little uncomfortable, but rest assured it is confidential and will stay between you and your lender. When complete your lender will be able to tell you how much you can spend on a home. It is always up to you to choose to spend less, but you cannot spend more. This is because this number is tied to your debt to income ratio. This is the amount you earn vs the amount you owe on other liabilities like car payments.
Your lender might also need to do some credit repair in order to boost your credit score. They can tell you exactly which things should be paid off in which order and which accounts you might be better off closing for good. Once you begin this process do not buy a car, or close accounts without first discussing it with your home lender. This can completely derail the process and set you back to square one. For more information on what not to do, see our blog post 6 Don’ts When Applying for a Mortgage.
As soon as you have your number from your lender they can provide you with a lender letter that is required with any offer you submit. This letter acts as the proof that you can afford the home you want to buy. When you have this letter in hand you and your real estate agent, ideally us, can begin to look at homes and figure out what specifically you want and need. We can narrow it down together until we find the home you want to buy, and that is how you begin the home buying process.