Getting started The process of buying a home starts much earlier than actually looking for homes. Every future homeowner should start out with the clear commitment and decision to buy a home. This might sound obvious, but it is the basis in order to start a series of actions that will help you eliminate and avoid some problems from the beginning.
How much can I spend? After making the decision to buy a home and before starting to search for homes, you should find out how much you can afford. Ideally, this involves setting up a meeting with a lender or a mortgage specialist for consultation and getting pre-approved for a loan. A pre-approval differs from a pre-qualification in that a pre-qualification just represents an estimate of how much you can borrow, whereas a pre-approval already includes the lender’s commitment to lend a certain amount of money. The pre-approval will help to speed up the selection and buying process significantly.
Choosing a lender With so many different institutions offering various types of mortgages, it is helpful to shop around with a few different lenders to find the best product for you at the lowest rate. With the rates in the mortgage market constantly changing, it is necessary to shop with different lenders the same day (or at least within a few days) to be able to compare the offers.
Looking at the big picture The costs for buying a home don’t just consist of the monthly payments for the purchase price, but include other significant expenses such as insurance and energy bills. Buying the home with the lowest purchasing price can be tempting but might not always pay off in the long run. Besides improving the living standard, homes with better energy efficiency as well as lower insurance rates could save you 10s of thousands of dollars over a mortgage period. A higher initial purchase price might therefore become more than offset by these savings. Experienced builders will be able to offer you an energy efficient package and/or a quality structure, which will be the basis to get significant knock-offs on your insurance rates. These factors have become much more important after Katrina in light of the soaring insurance and electricity costs.
Select your home Once you are pre-qualified for a loan it is time to find the home you like! Take your time to look at various floor plans and options to find out which layout you really like. Having a builder who is flexible enough to fulfil your customization requests is of course a huge advantage in getting your preferred layout.
Closing the deal After finding and choosing the home that you like and which fits with your financial planning, you can negotiate all final details with your builder and agree on a purchasing price. After that, you are ready to complete your loan application and move on to the building phase.
Your mortgage agent or lender should assist you from the beginning throughout the whole process and will be able to answer every detailed question that goes far beyond the above mentioned.
