The First Steps to Buying a Home
If you go through the three steps I’ve outlined below, you will be ahead of most first-time buyers. You will be much more likely to succeed in the purchase of a home. Lastly, you will be in a better position financially, because you will have purchased a home within your means. In other words, you’ll be less likely to face a future foreclosure. So without further ado, here are the first three steps to purchasing a house that I recommend taking:
1. Research and Education
The first phase of the process requires plenty of research. Next, you should spend some time learning the terminology or lingo associated with the home buying process. In particular, you should learn the mortgage terms, since that is where first-time buyers often get confused. The third step in your research process should be the various types of mortgages. available to you. This overlaps with the terminology research mentioned above, but it goes beyond that. Instead of just learning the names of the various mortgages, you should find out how they work. In particular, I recommend that you study the difference between adjustable and fixed-rate mortgage loans. This is another area where first-time buyers often wander astray, choosing an ARM loan when they should have chosen a fixed mortgage instead.
2. Establising your Budget
The next thing you should do is establish a home-buying budget for yourself. This is a separate step from the mortgage application process, and it should happen before you start talking to lenders. This is one of the steps to purchasing a home that many first-time buyers skip altogether.
3. Get Pre-Approved for a Mortgage Loan
Let’s start by defining what this means. Within the context of mortgages and home buying, pre-approval is a process where the lender reviews your finances and tells you how much you can borrow. Just remember what we said earlier, about getting pre-approved for a mortgage that’s too big for you. Start with your own budget first, and then get pre-approved by a lender. Do not exceed your monthly spending budget, regardless of the pre-approval amount.