New Home Buying 101 - Part One
Home Buying 101 – Part One
Getting Ready to Buy
If you’re searching for a home for the first time, or even if you’ve purchased before, parts of the home buying process can be a bit confusing. There are special terms like escrow, new processes like inspections, and so much paperwork. Our goal is to make the process as transparent as possible for you.
As you get started in the process, how do you prepare and start your search? Here are the typical steps involved in getting ready to purchase a new home:
Save for your down payment and home buying fees.
Down payments can be as low as 3% with FHA. The more you can put down on a home, the lower your monthly payment will be. If you can put down 20% or more, you will avoid paying PMI (private mortgage insurance), which adds to your monthly payment. Overall, the more you put down, the less expensive your monthly payment will be. You will also need around 3% of the purchase price saved for your closing costs (see more on that below).
Pre-approval for a mortgage involves applying with a mortgage company. Your pre-approval will let you know the maximum purchase price and monthly payment you qualify for. You may want to consider your overall monthly budget before setting your own maximum home price.
Most builders, including RM Homes, have a preferred lender who can make the mortgage and closing process run more smoothly. You may also want to shop around for mortgage rates. Once you have picked a mortgage company, apply with them for pre-approval. This involves sharing proof of your financial ability and obligation, so you will want to have all your paperwork in order.
RM Homes’ preferred lender is Christine Madrid of Caliber Home Loans. For financing information call 425.979.5227. Find a mortgage calculator and more information: www.christinemadrid.com .
Stop spending money.
One important and often overlooked step: once you have your pre-approval and you start looking in earnest for a new home, stop spending money. Do not make any large purchases, especially ones that would need to be financed like a new car. This can negatively impact your credit score and your mortgage approval. Hold off any major expenses until you have closed on your new home purchase.
Part Two: New Home Search
Now you are ready for the fun part: searching for your new home! This part can also be a little fraught with emotion and aggrevation, so we have some tips to help you stay on track while you shop. Check out part two of this series, Your New Home Search.
Read all three parts of this Home Buying 101 series:
Part two: New Home Search
Part three: Becoming a Homeowner