The American Dream Series
First Time Home Ownership! Part 2
Want to go look at this house? How about this one? Oh that one looks cool! I could see us there!
Does this sound like you or someone you know who just decided they are wanting to get into the real estate market? You’ve readied yourself on all fronts, and are now eager to get in and see as many homes as you can, hoping that each one somehow meets the laundry list of expectations you may have for your first home. But what if you find that one property, the one that matches nearly everything you want, including that weird yet somehow aesthetically pleasing dog shower in the oversized 3 car garage. It all seems too perfect, until that dark cloud of doubt starts rolling in. “Wait a minute, can we afford this?.....”.
This question is all too common for people purchasing their first home, and with good reason. You don’t want to be heading out on your home search with no clue how much house you can afford. Sure, that $1,000,000 penthouse condo may have the best views in town, but if you can only afford the 1 bedroom, 700 sq ft apartment and you don’t know it, you will be surprised and discouraged when you start looking. For this reason, our next step in the home buying process is determining how much house you can afford. For most, this means determining the amount of a loan you can qualify for, and how much of a monthly payment you are able to make. The best place to start with this is by engaging a trusted lender in your search. These can be mortgage brokers or directly from a bank, either way, a quick conversation and exchanging of financial documents will dial you in. Talk with a few, you are giving these professionals every financial document, personal identification, and birth certificate of your first born you have, so make sure you trust the person or company, and can have easy conversations with them.
For those lucky enough to have the cash to put towards your first house, this can be a great time to bring in a financial advisor to assist you in determining what price of house is in the cards. Everyone has their own plan as to how much of your total net worth should be locked up in Real Estate. The right answer is whatever fits with you and your plan.
So, now you have a lender who you trust, and are ready to jump out into the world of property search. You just sent over your entire life in the form of paperwork to them, and received numbers, estimates and documents galore. What do they all mean?
Check back in for next time where we walk you through what all the lending jargon means, and break down that monthly payment...