1. Know what you can afford.
I think we’ve all spent time admiring the beautiful dream homes on TV or online, and it sure is fun imagining being the owner! However, this could potentially skew your vision. It’s important to have a solid understanding on exactly what you can afford, especially with interest rates rising. Understanding the key components of affordability are the first step in your home buying process. Once you have a strong grasp on those, then you are ready to get pre approved for your loan.
2. Get pre approved for your mortgage.
When you get pre approved, your lender gives you a written agreement in regards to funding your loan, provided the home you choose appraises out in value. This is an important first step because it will give you an estimate of precisely how much mortgage you can carry. It’s important to remember that a pre approval letter from a lender is not the same thing as actually getting prequalified for your loan. Some lenders will give you a pre approval letter, however there are many additional qualifications to consider, so it really doesn’t amount to a true pre approval.
3.Decide what trade-offs you’re willing to make.
It is important to remember that there is a difference between things you “want” and things that you “can’t live without” when it comes to a home. Unfortunately, you might not be able to find a house that checks off every single one of these boxes, so it’s important to remember which things you want prioritized. It’s also important to remember what things may become needs later down the line, such as a parking spot if you plan on getting a car at some point, so make sure you are honest and rational about what your needs really are.
4.Explore other ways to buy your first piece of real estate.
If you want to be a home buyer but can’t necessarily afford to buy a single-family house in your neighborhood of choice right now, there are still ways for you to get creative! Buying an investment property while you rent to others, buying a two- or three-family unit property, where you live in one unit and rent out the others, or even build a multi-generation household to leverage additional income. All of these can be great ways to get your foot in the door!
5.Get smart about the process.
Given that a majority of residential real estate markets will stay tilted toward sellers for the foreseeable future, you’ll need to be as smart as you can to find the home that you love! That being said, be sure to educate yourself as much as you can. Read, ask questions and challenge your own assumptions. And don’t be afraid to seek help if you need it!