The Basics of Home Buying
When it comes to something as important as purchasing a home, you can save yourself valuable time by deciding what you want and what you can afford.
What Does Your Dream House Look Like?
First things first! Start by creating a list of features you want your home to have. How many bedrooms and bathrooms? Do you want the maintenance of a yard or a swimming pool? Determining what your dream house consists of will help you in your search. Remember however that everything costs and maintenance and routine repairs can be costly. Depending on the amount of money you qualify for in a mortgage will determine what features of your house you may have to do without.
Secondly, you need to determine where you want to live. If you have children, or are planning on having a family someday, then a home in a good school district may be a necessity for you. Are you just starting out, or looking to downsize from your current home, then a condominium or town home may be the best choice for you.
How Much House Can You Afford?
Now that you have narrowed down your choices, the next step is to see what you can afford. You can get a rough estimate of how much house you can afford by using our mortgage calculator. It helps to know how much you will most likely qualify for by getting pre-qualified for a mortgage.
Pre-Qualify vs. Pre-Approved
Being pre-qualified is different from being pre-approved and it's important to know the difference. A loan pre-qualification means that your income and expenses have been reviewed and plugged into a debt-to-income ratio formula. It typically does not include an in-depth analysis of your credit report or look at your true ability to afford to buy a home.
Getting pre-approved for a mortgage indicates how much house you can afford, what your interest rate will be, and it lets the seller know that you are serious and you can afford to purchase their house. When you are a pre-approved buyer you are basically already approved for a mortgage and just subject to a property appraisal. Your pre-approval status can act like a bargaining chip for you when you begin the negotiating process with the seller.
Once you are pre-approved and find the home you want, you are ready to make an offer! This can be the most tedious part of the process because you as the buyer want to get the best deal, and the seller wants to get the best price. A third party or a real estate professional can really help you to negotiate an offer that is reasonable to both parties.
Once your offer is accepted, now starts the actual home sale process, which includes an appraisal of the property. A home inspection is no longer required by the lenders but highly recommended to have one done for your protection. Your real estate agent can recommend a licensed inspector.
Purchasing a home—whether it's your first or you're downsizing—can be a very time-consuming tedious process. California Coast Credit Union’s friendly and knowledgeable home loan representatives are happy to help take the hassle out of home buying. Give us a call at (877) 495-1600 or visit calcoastcu.org to access our mortgage calculators and more financial tools.