How to Prepare Now to Buy a Home in the Pensacola Area This Year and Beyond
Buying a home takes thoughtful preparation and planning. It’s important to get your finances in order and other tasks done before you even start house hunting.
Keep in mind that this early stage of the buying process doesn’t happen overnight. It takes time on your part, even before we start working together on this journey. That way, when you are ready to make your move, you can confidently move forward to make that new home you just saw YOURS. It is important to start prepping and planning now if you want to buy a home in the months ahead or even a year from now, as this will help the home buying journey move along smoothly.
Know that the Mark Lee Team can (and will) help cut through the overwhelm, especially during this shifting market ahead. We can schedule a time to meet and can walk you through how you can make a new home happen for you, no matter what you think might be an obstacle in your way right now. We have most likely helped a client overcome the same hurdle before and we would love to help you too.
The list below will help you stay on task, and you will be ready to buy in no time:
Do Your Homework
Here are some key activities you should do now:
Learn about mortgage options. Do you understand how mortgage rates work, such as fixed rates or ARMS? Or the difference between an FHA loan and a conventional loan? Learn what’s available now and even the outlook for rates in the coming year so you aren’t overwhelmed or surprised later down the road. This way you can determine what type of financing will be best for you.
Explore neighborhoods and open houses. Check out certain neighborhoods in terms of cost and features of homes. Online sites such as www.MarkLeeTeam.com will include open houses and current listings. Get a better feel on what’s important to you such as location, large kitchen, backyard, open-concept, or size of rooms. With condos, you’ll also get an idea of monthly HOA fees and amenities in different buildings.
This time spent “scoping out” homes provide a reality check and will make you more efficient when it comes time to really house hunt.
Check out the Mark Lee Team’s downloadable "Buyer's Guide” This provides you with a step-by-step overview of the home-buying process, as well as an overview of the Pensacola Bay area.
Get Your Finances In Order. Buying a home is probably THE biggest expense you will ever have in your life. You want to be a responsible buyer and homeowner, so now is the time to focus on your finances.
Strengthen your credit score and build credit history. Your FICO credit score is your gateway to a good mortgage since lenders use it to determine your risk as a borrower. So the higher your score, the better your loan options. And, if you’re a couple, then BOTH of you will need to work on your credit.
It can take six months or more to improve your score, so start today. Pay your bills on time, don’t take on any large debt, and double-check your score for inaccuracies.
Know what monthly mortgage payment you can afford. Focus more on what you want to pay per month rather than the purchase price (of course, that is an important item too!). Plus, what a lender says you CAN afford can be very different from what you are willing to spend each month. No one wants to be stretched too much and become “house poor.”
Work backward from your desired monthly payment to calculate the price range you can afford. The Mark Lee Team has several lender partners that can show you how to budget for a home and determine what you can afford.
Save for a down payment. Cut expenses and save, save, save (maybe find a high-yield savings account) right now. No matter if you get a 3% down loan or a conventional 20% down loan, lenders still want to see if you have enough cash reserves in the bank.
Remember, owning a home isn’t only its purchase price, but it includes other costs such as taxes, insurance, maintenance, and possible HOA fees. With a larger savings account, a lender knows you are financially responsible and less of a risk.
Stay Focused with These 10 Commandments
You need to avoid some potentially risky actions that could derail your ability to obtain a mortgage. Overlooking just ONE of these items can compromise your chances for qualifying for the loan you want.
Thou shalt not change jobs, become self-employed or quit your job.
Thou shalt not buy a car, truck or van.
Thou shalt not use charge cards excessively or let your accounts fall behind.
Thou shalt not spend money you have set aside for closing.
Thou shalt not omit debts or liabilities from your loan application.
Thou shalt not buy furniture.
Thou shalt not originate any inquiries into your credit.
Thou shalt not make large deposits without first checking with your loan officer.
Thou shalt not change bank accounts.
Thou shalt not co-sign a loan for anyone
As you can see, buying a home takes preparation and planning. It’s important to get your finances in order, as well as other tasks done, before you even start house hunt. You will be a more informed buyer and borrower, and you will be ready to purchase a new home with confidence and less stress. And of course, the Mark Lee Team is here to help you every step of the way.