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You wake up one day and decide you’re tired of living in a 540-foot studio apartment with windows that don’t open and a wall-unit AC. You see a house you want to buy, so you call up your agent and ask him to take you over to 123 Main Street. Is this the right first step in the buying process? Definitely not. Although it may seem a little backward when looking for a home, your first step should not be house hunting, but instead talking with a loan officer. It’s tempting to shop for homes first, but it’s smart to shop for a mortgage loan officer’s advice before you do. Here’s why we strongly recommend it.
To make the home-buying
process as smooth as possible, we work with excellent loan officers. By taking 10 minutes to talk with a loan
officer over the phone or by doing an online application, you’ll learn how much
you can borrow. This prequalification process
is easy. The loan officer will walk
through your financial history, ask you about your job, and then figure out
your buying power. Once you have this
information in hand, you’ll be ready to house hunt. Since you will know what you can afford, you’ll
shop for homes you could realistically buy.
Prequalification locks you in to the amount you can borrow for typically
90 to 150 days, which gives you lots of time to look at homes.
Before you decide on how much
you want to spend, be sure to think about what type of lifestyle you want to
lead. Only you know how much you will
feel comfortable borrowing, but keep in mind you want to be able to still go to
the mall and out to eat as well. Some
lenders will want you to borrow the maximum amount that the bank will lend you,
but depending on your lifestyle, you could end up biting off more than you can chew. To avoid this, remember a general rule of
thumb is to borrow no more than 28% of your pre-tax income. The 28% represents your house payment, taxes
and insurance. If you have debt, such as
student and car loans, this number should not go above 36%.
So why not go look for houses
now and get prequalified later? At this
time the inventory of homes is so low in this area that homes are only on the
market for a short period of time, so you don’t want to back track and hope you
get qualified to buy the property. If
you’re not prequalified, you could miss out on the deal. Having first talked with a lender before
making an offer makes you look like you’re serious about buying the home. Because you took this first step, the seller
may take your offer more seriously than an offer from another prospective buyer
who has not met with a loan officer. Remember,
first things first!
If you’re interested in seeing what homes are
on the market, give us a call at 952.303.4347 or email us at teamwinegarden@teamwinegarden.com. We’d be happy to assist
you.
