Here’s an article that originally was published in the Hermit Haus Redevelopment blog, but we thought some of you might want to read it here, too. Not everyone is trying to sell; some of us are trying to figure out how on earth we can buy.
This post is for those of our readers who are not investors or rehabbers.
This weekend a family friend whom we’ve watched grow up asked to come out the the ranch and get some advice. She wants to buy her own house. I’m always glad to see someone succeed in buying their own house rather than pay for someone else’s through rent. I even tell my renters this.
For most people, buying a home represents the single largest investment of their lives. Many people have no retirement savings other than the equity they build in their homes over time. But even if you plan to move in a few years, maybe especially if you plan to move into a larger home, taking time to make sure you buy the right home for you is worth every minute you spend on it. After all, you’re going to be there for a while, maybe most of your life. Choose well.
So, here in a nutshell is a very high-level process.
- 1. Check your credit score.
- The higher your credit score, the lower the interest rate you may qualify for. Many lenders require at least 640 to even make a loan. If your score is lower than that, you may be able to obtain a mortgage from a private lender, but the interest rate will be much higher than a conventional or government-backed mortgage.
- 2. Contact a mortgage broker.
- Make no mistake, the mortgage broker has a fiduciary obligation to the lender. But they also get paid only if they help you get a mortgage. If you have credit problems, they may be able to advise you on strategies to overcome them. Regardless, your mortgage broker knows the formulas the lenders use to determine how much of a mortgage you can afford.
- 3. Drive around.
- After finding out how much house you can buy, you can zero in on neighborhoods that you can afford and want to live in. Don’t rely on Google for this critical step. You’ll learn a lot more from driving through the neighborhoods than by looking at pictures.
- Is the neighborhood improving or going down?
- Can you see evidence of gangs or drug dealers in plain sight?
- How well do your potential neighbors maintain their houses?
- 4. Think about renting.
- I’ve always been a fan of renting in a neighborhood for a year before buying there. To advance my career, I’ve had to change cities a number of times. Because I didn’t know the neighborhoods in my new hometowns, I rented before I bought. If you know the neighborhood well, don’t worry about this step.
- 5. Find a Realtor®.
- A buyer’s agent is your best friend in buying a house. Your agent knows the neighborhoods and may even be able to find you a house before it goes on the market. They will also guide you through the process and the tons of paperwork. There are tons of paperwork.
- 6. Find the perfect house for you.
- Only you can know what that is, but I might humbly recommend one of ours.
Guess where you can find a good agent? Call us! Carol will be happy to talk to you at 512-807-8777 if you are near us!