Imagine the first moment that you get over that hurdle – I’m going to buy a house!
It’s a mixture of excitement and terror. The biggest purchase you’re likely to make for a while. Short of having a child or starting a new full-time business there’s hardly anything in this life that changes your perspective on EVERYTHING than changing where you call home. Your home is your identity – it reflects and affects what you do in your personal time, how you see yourself. It determines who your neighbors are… or whether you’ll ever see anyone when you get home.
The first day that I meet up with new buyers there are always a TON of questions – just like a journalist I ask the basic questions Who (is making the decisions about the purchase), What (type of home are you looking for), When (do you need to be there – are you ready to go NOW? Also, how available are you to go look at homes) Where (do you want to have your new home – what type of location), Why (what’s changing in your life to motivate the big move), and finally How (the biggest question of all!)
Most of these are easy questions – for example: “I am getting married, we want OUR house, we’re thinking we’ll want to grow our family and have a baby in the next few years and we need a home office so at least 3 bedrooms, we’d rather have a house than a condo, our leases are up in a couple months and we’d love to have a week to move so closing right before the lease is up would be ideal, we both grew up in Halls and would like to be somewhere between Powell and Corryton – I work downtown so, hopefully no more than 15 minutes from there.” That is where the easy questions give way to the BIG question – HOW.
If you’ve been saving up over the years and if you have the funds ready to buy with cash it’s another very easy question. If not, the question of HOW takes an interesting turn. Looking at coming up with the funds to buy the house you want involves talking about how much house you want to buy. Getting pre-qualified by a great (ideally local) lender is one of first steps with his. It tells you how much you CAN spend – how much they’ll be willing to lend you based on your credit history, your employment status and other information. After you’ve gotten this information you have to determine what you WANT to spend. Usually the banks will lend about 1/3 of your annual income toward buying a home – financed and forecast over 30 years.
We will have conversations about this. Our goal is that your new home will be a blessing, not over-bought or needing more maintenance than you want to take on.
Below is an amortization table that will help with knowing what your loan will look like, it shows the principle and interest costs per $1,000 borrowed, once you find out about the interest rate for your loan.