A lot of my readers and friends reached out with more questions from my previous blog of Steps to Buying A Home (https://loveahmongus.com/steps-to-buying-a-home/) so I am writing this to help people prepare financially for their home purchase.
It probably seems like a never ending list of things to check off before you purchase a home but I’m here to help with the financial aspect of it and hope that some of this information will be useful to you.

1. Check Your Finances
Isn’t this the most obvious? Sometimes not. Check your bank account, check your spending, can you afford another payment added onto everything that you already have going on? This is a good time to check your expenses and see if a home purchase is a good time for you. I’ve written a blog with an excel sheet that can help with your spending, for free! (https://loveahmongus.com/what-does-my-expense-sheet-look-like/)

2. How Much Should I Put Down?

My answer will always be 20% or more. Why? Because if you don’t, you’ll be paying $300-$500 more a month in PMI which stands for private mortgage insurance. This does absolutely nothing for you but goes towards insurance to the lender in case you default on your loan. On top of that, you’ll be paying this until you reach the 20%. Did you know that real estate investors always put 20% down on all their investment homes because they don’t like throwing money away so you shouldn’t either because your home is your investment.

3. 30 Year Mortgage Is Okay But 15 Is Better

My husband and I did our mortgage for a 30 year term because we were unsure what would happen in the next 15 years in case we lost our jobs and didn’t want to risk it. A year later, we refinanced for a 15 year term because we don’t know what’s going to happen in the next 15 years either and I actually left my job to become a Stay At Home Mom. Not only did we get a better interest rate but we will be debt free in 15 years instead of 30! Can’t really beat that!

4. Make Sure Everyone Is On The Same Page

This really should be #1 but I feel like when people are looking for a home, most spouses and family are already ready together. This just doesn’t apply financially but also mentally and physically. Make sure the home is a good fit for everyone and get their input when looking at homes together. You want a home for everyone and not just you. Sometimes everyone agrees and sometimes it’s a little more difficult but let everything be done within reason. A green or orange wall can always be painted over or a yellow fireplace can always be painted. The same goes for kitchens, bathrooms, and bedrooms. You also don’t want to overwork yourself or others to death feeling like you are flipping a home. Just some TLC to a home is expected but not flipping a house — unless that’s the purpose of your purchase.

With all that said, don’t let this discourage you from purchasing a home. Only you know when the right time is to purchase a home whether you have 1% or 20% down. These are just steps to encourage you to save money in the long run. I wish the best for you in your home purchase!

Sincerely,

Melissa Lee

Oftentimes, when we purchase a home, we tend to do steps backwards or completely out of order so it was recommended by a friend to write this blog so that it can help out first time home buyers or others who may be interested. I write this experience as a previous Realtor and current first time homeowner.

1. Pre-Approval

Nothing hurts more than already having your mind and heart set on a home that you’ve been looking at for days or months, just to find out that you don’t qualify for it. The purpose of a pre-approval is to make your standards become more realistic. It shows you what you CAN afford and what homes you CAN fall in love with and to be honest, most realtors won’t work with you for too long until you get a pre-approval. It also shows that you are serious about the home buying process.

2. Get A Realtor

A realtor for home buying is free* to you! They work FOR you and with you. I do not recommend going in blindly as an agent who is working with the homeowner is going to only try to get the best deal for the homeowner and not you. The realtor who works for you is going to be paid by the commission on the home. There’s NO reason not to have a realtor who works for you and is FREE*.

(*Most realtors who work with homebuyers are free but with the new virtual brokers such as Rex and such do not pay commission to the buying agent. Please be cautious of this when looking at which homes have these brokers.)

3. House Searching & Viewing

After getting your pre-approval, I recommend at least having 3+ houses in mind to go look at because if you’re set on one home and it gets sold or under contract, you’re gonna be right back at step 1. This will save you time and heartache.

4. Getting An Inspection

This step is automatic for homes already built but not for new homes or homes waiting to be built — I highly recommend it. Getting an inspection ensures that the home is in good condition and if not, you can walk away or use it as negotiating point when it comes to putting in an offer.

5. Putting In An Offer

This is the most important part as it could be you get or don’t get the home. Make sure you come with your best offer and not your lowest offer. Best offer doesn’t necessarily mean HIGHEST offer but your best. Do NOT go over your budget and do NOT lowball. The process of home buying is serious and you should take it seriously or you’ll find yourself without a home.

I hope explaining this process has helped and that you take something away from this! Feel free to reach out with any questions or comments!

Sincerely,

Melissa Lee