Buying Within Your Means: Be Prepared!!

Buying Within Your Means: Be Prepared!!

I recently read a column online that gave some great advice for home buyers; first timers and repeat buyers alike. I will link it below. The most important point that it illustrated is the difference between pre-qualification and pre-approval. Especially when you get to the offer submitting stage, a pre-qual letter from a lender is usually included but it pretty much doesn't mean anything without pre-approval to back it up. In other words, before you ever START house hunting, get PRE-APPROVED. It will only help you with your search by really telling you the highest you can go. Many times you might get pre-qualified for more than you actually get approved for and that can be deceiving to the hopeful buyer.

Buying Within Your Means: Be Prepared!!

As most of you know, interest rates are still on the low side of things and monthly payments are lower too on 15 and 30 year fixed rate loans.  Take this into consideration while using the formula of not going over 1.5 times your annual income for the price of your potential home. It's a good one to go by and keeps you close to what's reasonable and not overspending.

Buying Within Your Means: Be Prepared!!

Lastly, a 20% or more down payment is crucial! Do whatever you can to have this ready for submitting offers. I've found that the majority of my buyers that offer 20% or even 30% have a better chance at opening escrow than those offering less. Bottom line is, the more prepared you are, the better. Be prepared mentally and emotionally too as this market is highly competitive. You may not get your first choice. My most recent listing had almost 30 offers submitted. Consider removing certain contingencies you'd be comfortable with removing and offering to pay for inspections. Sweeten that offer and you might get a sweet deal that stands out above the rest. Talk honestly and openly with your Realtor and figure out what works best for you, your budget and your future expenses down the line.

Buying Within Your Means: Be Prepared!!

You can read the article I'm referring to here:

http://m.utsandiego.com/news/2013/may/01/homebuyers-afford-mortgage-prequalify-home-loan/