Getting engaged to be married
typically involves some significant life changes. It's common for engaged
couples to begin looking for a house together right away in anticipation of
their new life together. The process of buying a home for
the first time could span as long as a 12 months from first laid plans to the
closing table. To ready yourselves for one of the biggest decisions you will
make as a couple, I’ve compiled a short list of things you need to know:
Check your
credit scores and get copies.
A recent FTC study found that 1 in 4 Americans had errors on their
credit reports, and that 5% had errors that would have led to higher rates on
loans had they not been caught. Avoid
any last minute surprises by checking early and correcting any mistakes that
are found.
Determine how much you can
comfortably afford.
Lenders generally look for a total debt load of no more than 43% of your
gross monthly income (referred to as your debt-to-income ratio). This figure would include your future
mortgage and any other debt including car loans, student loans, credit cards,
etc. There are multiple mortgage
calculators you can use under the mortgage calculators tab on my homepage.
Have a down payment plan in
place. The average conventional mortgage requires a 20%
down payment, and if it is affordable, you should do it. The loan costs will be much less and you will
receive a better interest rate. If you
are not able to put down the full 20%, there are various other programs that
are available to you. Most common is the
FHA loan, which requires a 3.5% down payment, but they require mortgage
insurance premiums, which will increase your monthly payments.
Gather your paperwork for the
loan. This should be done about 6 months out from when you would
like to move into your new home. Banks
are very particular about what documentation they require. The list includes: W-2 forms and personal tax
returns both from the last 2 to 3 years, most recent pay stubs, credit card and
all other loan statements, bank statements, a list of addresses for the past 5
to 7 years, references (personal and professional) as well as brokerage
(investment) and 401K account statements.
Get a pre-approval for your loan. This
should occur around 3 months before you are ready to move. A link to Premium Mortgage is provided at the
bottom of my website, and Jackie Ruotsi is very knowledgeable in the entire
process and can help you every step of the way.
Once the pre-approval is done, you can start shopping for your new
home together.
Now that you are prepared and ready to
shop for a home, it is time to determine what home is to you and what area is
best for your new life together. There
are multiple factors to consider when choosing a home:
How long do you plan to live in this home? It may sound odd to think about planning to
move from a home you have not even purchased yet, but this one variable can
determine the priority of other factors involved. Do you plan to start a family in the
house? The answer to this question could
sway decisions on the number of bedrooms needed, what school district to look
for your house in, etc.
Know your needs versus your wants AND your deal breakers.
Everyone has their ideal home in mind, and that home has a list of amenities
that are a necessity. Do you need a big
backyard for pets? Do you want an open
floor plan? Do you prefer to be on a
quiet street? Do you need to be close to
a certain area for work? It is always
good to have a list that is categorized and in order of preference.
Know the different neighborhoods and the value of homes within
them. A $200,000 in
one area might offer considerably more than a $200,000 home in another. For instance, if you are looking for a top 5
school district (East Aurora, Williamsville, Clarence, Orchard Park, and
Iroquois); a $200,000 home in each of the districts will be considerably
different. You also have to take in to
account the taxes associated with each area.
The more your monthly tax payment is, the less you will have available
in your budget to pay for your actual mortgage payment. (As me about escrow
accounts!!…I’ll explain.)
If this all sounds overwhelming, that is okay. This is why professional Realtors are there
to help throughout the entire home buying process. As a Realtor, I take pride in helping couples
and families navigate the sometimes-choppy waters of home buying. I am here to help from the first step all the
way through closing, and then even beyond.
Jim Budzinski
Licensed Real Estate Salesperson
Office - 716-652-0232
c21.jimmyb@gmail.com
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