Thinking about buying your first home? Congratulations! Open Mortgage can work with you every step of this empowering and life-changing process.
There are many requirements and steps to obtain a mortgage, and the process can feel intimidating whether you’re a first-time homebuyer or seasoned veteran.
There are numerous factors to consider when buying a house, and some are more important than others. Specifically, people can bring into consideration price, home’s condition and sometimes the location. But what about other lesser known varying factor that can make a break a purchase.
Spring is right around the corner and is usually considered the right time to buy a home; but the real question is are you in the right time to buy a home? You may have read all of the books and blogs that even whispers the word “Homebuying” but you are never prepared until you find yourself pre-qualified. While many people have their own novice ideas about what is needed before you decide on buying a home, this is pretty much the essential item on your path to homeownership.
What exactly is pre-qualification? Basically, it is when a lender examines the basics of your financial health which includes all the debt that you have accumulated as well as the income you are bringing in. This is the step that many people are equipped to survive since it is not that thorough of a search. For the most part, you go to a lender and fill out a quick application - more than likely on their website - and they will contact you with an estimated approved amount. It is the equivalent of going to the dentist for a teeth cleaning but the next step is actually a route canal.
According to Investopedia, people make the common mistake of confusing pre-qualified with pre-approval. The latter process is a little more complex than looking to see if your job gave you a raise. Pre-approval actually involves going into financial history and looking at everybody’s favorite (or not-so-favorite) word: Credit. Credit history is definitely important because it determines the stability of making payments on the mortgage. Sure, you can have some of the lowest student loan and credit card bill totals, but missing the payments can indicate a likeliness that you will default on a loan by missing out on mortgage installments.
As mentioned in the beginning, there is a “right time” in which you can buy a home, which is actually before the pre-qualification process itself. The homebuying process is a long journey and can be unnecessarily extended, or cut short, if you are not properly prepared. One of the main things that you can check for will be income. Obviously your pay factors in, because it will determine whether or not you have the money for a mortgage payment as well as the ability to place a down payment on a home. While there are down payment assistance programs available in some areas, it may not be available in all and also not available to everyone in that eligible region. Income may even be more important than credit history, because you will see clearly how you can pay your current debts and any future ones you may incur.
The best way to measure the readiness of your salary is to budget, or take note of what you are spending on. Sure, lenders will look at how you handle your debts and bills, but you can assess how you spend money on essential items such as food and clothing. Perhaps you are on a special diet and spend a little extra to accommodate that. It can even be the fact that you have a special shopping habit and have to accommodate that unnecessary need. Essentially, you will need to monitor your funds and where they are going. So there is more to pre-qualification than the official process itself.
Buying a home is a huge financial decision and so it will require a long path before the end result. Pre-qualification is just the first step of that journey; however, going through a “self pre-qualification” is equivalent to doing a tune up on your financial vehicle before taking that long trip.
There’s something desperately missing in your life. You decide to do something about it now, and so you sign up for one of a slew of websites that aim to help yearning hearts like yours find a match. You flip through profiles late at night, and certain phrases or well-lit photos make your heart skip a beat. And when you think you may have found “The One,” you figure it’s time to make an assessment in person.
Buying your primary home is like achieving an essential piece of the American dream. And once you’ve experienced the satisfaction of homeownership, you might be tempted to purchase another. Hey, who wouldn’t want a leisurely vacation getaway spot—especially if you can turn it into a cash cow by renting it out?
In a white-hot market, you may feel pressure to make some concessions to win over a seller—and, no, we’re not talking about sending a basket of banana-nut muffins.