home ownership

How to Buy Your Dream Home in 4 Steps


Good morning Loves.  Are you looking for a home?  Back in January  lots of us set goals for the New Year.  In 2015 I want to lose weight and save $7000.  Did you know that money goals are the 3rd most common New Year’s resolution?  It’s true.  So what do you want to accomplish this year?  Maybe you want to open a savings account, maybe you want to pay off debt or maybe you want to buy a home.

As you’ll remember BF and I moved into a new apartment in October.  We plan to stay here for five years or so and then buy a home.  We’re not ready to leave the city yet, but we can’t afford to buy a home here so in five years we plan to move out to the suburbs and buy our dream home.

Here are four steps to help you buy your dream home:

Find a real estate agent

I know a lot of people don’t use a real estate agent because they don’t want to pay a broker fee.  It’s important to know that the person selling the home pays the broker fee, not the person who is buying it.

Hiring a real estate agent to help buy your dream home will save hours of driving around to open houses and searching the internet.  Tell your agent the amenities you’re looking for, the price you want to pay and the neighborhood where you want to live.  Your agent can do all the leg work and steer you in the right direction towards finding your new home.

Get a mortgage pre approval from your bank

We’re getting a bit ahead of ourselves, before you start looking for a new home you need to know how much the bank will lend you.   Make an appointment at your bank to get a mortgage pre approval.  This will give you an idea of the amount the bank is willing to  lend you for a mortgage loan.  When the bank is lending you money they take into consideration the amount of your down payment, your credit history, your total income as well as your credit score.

It’s a good idea to order your credit report before visiting your bank to get an overall picture of your financial situation.  This way there will be no surprises.  It also gives you a chance to correct any information that’s being reported incorrectly to the credit bureaus.

Add up your savings

Your savings are an important step in getting pre approved for a mortgage because the amount of your down payment plays a factor in the amount of mortgage loan you can afford.  However the spending doesn’t stop there.

The bank will also want to ensure you have sufficient savings to pay for miscellaneous costs such as notary fees, property taxes, moving expenses and closing costs.

Figure out how much you can afford

A little secret from the world of banking: sometimes banks approve you for a larger mortgage loan amount than you can afford.  Just because the bank approves you for a mortgage amount doesn’t mean you have to borrow it all, you can opt to choose up to the total amount approved.

Use a mortgage payment calculator to determine the amount of a monthly mortgage payment you are comfortable with and an amount that fits into your budget comfortable.

And voila. You are four steps closer to buying your dream home!

Photo from Flickr

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