I wanna buy a home... but I have absolutely no idea of where to start!
by Tomeka Givens
So you've decided you want to buy a home. Now what?
Your very first step should be to reach out to a lender to discuss your financing strategy. Let me be crystal clear: not a credit repair person, but a lender. Why? Who better to tell you what you need to do, should you find yourself shy of pre-approval (denied for a mortgage), than the person who is qualified to pre-approve you.
In the event you are not pre-approved, ask the lender to "draw a road map" and tell you exactly what you need to do to get approved.
Sidebar: Don't get bummed out about not getting pre-approved. Delay does not mean denial. Follow the lender's instructions and you'll be pre-approved before you know it.
Fast forward: Now you are pre-approved. Yay! Mortgage mantra: just because the bank pre-approves you for a certain amount doesn't mean you should spend that entire amount. You must find your comfort zone. This is done by working backwards... rather than focusing on the purchase price amount, focus on what your monthly payment is going to be.
Lender: "Congratulations, you've been pre-approved for $xxx,xxx."
You: "Cool, thanks. My maximum comfort zone for a monthly mortgage is $x,xxx. At what purchase price does that put me?"
This is the question you ask the lender in order to determine your comfort zone.
When a lender gives you a break down of your monthly mortgage, it should include 4-5 items that I refer to as your P.I.T.I. M.I. (pronounced "pity me").
P - Principal
I - Interest
T - Taxes
I - Insurance
MI - Mortgage Insurance (if applicable)
Whatever purchase price your maximum monthly mortgage comfort zone lands you should be the maximum purchase price of homes you should be searching.
Along with your pre-approval you should get or request a loan estimate. A loan estimate shows the amount of your down payment, monthly mortgage payment should be as well as your closing costs. These are 3 figures you should know in the beginning and be confident in your ability to pay. Your down payment and closing cost (whether having it saved, obtaining funds from a home buyer incentive or negotiating seller help for closing cost) determines if you can successfully purchase the home.
Now that you're pre-approved, what's next? Check out part 2 in the series to find out!
If you have any questions please contact me: