Know Your Budget

It is easy to picture yourself cuddled up on a cozy couch in front of a sizzling fireplace with your marble countertops gleaming in the background. The only issue with this vision is that it may not be in your price range. Interest rates are projected to continue rising and now more than ever, staying within your budget is essential to purchasing your dream home. Pay attention to the components of affordability: saving for a down payment, household income; debt to income ratio, and credit score. 

Once you understand these components, you’re ready to apply for a loan. 

Get Pre-Approved

Obtaining a pre-approval allows you to know exactly how much house you can afford. The lender will take into account your income, debt, credit score, and any special circumstances. The amount you have available for a down payment should be added to this figure to arrive at the maximum approximate purchase price. A pre-approval means that a lender has reviewed your credit, reviewed your file, and is willing to fund your loan. Don’t open any new lines of credit, make any large purchases, or shuffle funds between accounts or you could jeopardize your mortgage.

Pick Your Non Negotiables

Start by making two lists. The first should include everything you’re looking for in a home that you simply must have. The second list should have the added features that would be nice, but that you are willing to live without. Share your lists with your real estate agent and take the lists with you when looking at houses. It’s easy to get caught up in a house only to find it doesn’t meet all your requirements. 

Look at Creative Financing

Get creative if you can’t afford to buy a single-family house in your desired neighborhood. You can consider buying a two or three family home and live in one unit while renting out the others. Some mortgage programs allow income producing properties, so this can be a great way to afford your first home. Buying with a partner or friend can increase your overall household income. Instead of paying rent with your roommate, you’ll be paying toward your own investment. Household income can also be increased by creating a multi-generational living situation. Purchase a larger house which fits the extended family, and see savings on utilities, child care, and even groceries.

Buy Smarter

Assemble your home buying team, including an experienced real estate agent, home inspector, and mortgage lender. For investment properties consider bringing in a tax expert and a real estate attorney, if one is necessary. Make sure to educate yourself by reading, asking questions and challenging your own assumptions about what your needs are versus your wants. Remember not to get discouraged if the homes you see on television are more appealing than the homes that you see in person.