So You Think You Know How To Buy A House – Step 1

Sounds simple enough.  Then you start browsing. Maybe on a national home listing site, or you click on a social media ad.  You save a house or two as a ‘favorite’ and you keep going back to look at it.  You drive through the neighborhood, look at the house from your vehicle and think, “yeah”.

But buying a house is a process.  And over the years it has gotten much more complicated. It’s a little less complicated if you can buy cash, e.g., no financing, but there are still a lot of ‘gotchas’ out there.  And with a big ticket item, the ‘gotchas’ are more expensive.

Step 1 should always be to see what you can afford.  You don’t have to buy for the max, but know where your comfort level is at.  Prices vary greatly even within the same zip code.  TALK TO A LENDER.  I recommend you get at least two opinions, from two different kinds of lenders.  There are regional banks, local or community banks, credit unions, and mortgage brokers from which you can choose.

They offer different kinds of financing programs. Some have a limited number of loans and you will have to ‘fit’ into one of them. Other lenders have a wider variety of loan programs and you will have more comfort and choice in deciding which suits you best.  It’s as important to know that you qualify for an FHA loan (but not a conventional mortgage) as it is that your maximum price is x thousands of dollars. Or that the Rural Development Home Loan you want is good in certain areas but not possible in others.

Realize that different loan types may require additional inspections which will be more out-of-pocket expenses. If you do get pre-approved (which I highly recommend), be sure that the loan officer has run a credit check, not just taken your verbal answers. There are people who get to the point of making a formal loan application and then they discover an old or erroneous blemish on their credit which will take time to resolve – and they lose that perfect house.

Come back next week for the next step.

Image courtesy of Stuart Miles/freedigitalphotos.net

Robert Smith is a licensed real estate agent in Michigan and has worked at Preview Properties, PC for 20 years.  Real estate law and lending regulations can vary from State to State. This blog and its posts are not intended as legal or financial advice.