What To Do Before Buying Real Estate

The first thing you want to do when buying real estate is figure out how you are going to finance your purchase. It is easy to get caught up in the "glamorous" portion of buying real estate and jump ahead to deciding on what furniture you want and what the carpet is going to look like. But don't do any of that until you have figure out your real estate purchase financing.

Part of figuring out your financing for buying real estate is to make a budget. Understand how much money you earn and where that money actually goes. Later, you can ask yourself what you can afford. Nothing complicated, use a spreadsheet to add up your monthly expenses. Do an honest assessment of your expenses that includes noting the one off items that tend to crop up month after month. Review your bank statements for details on your spending habits. Collect your recent pay stubs and credit card statements. Do you consistently spend less than you earn or more than you earn? Do you have a running credit card balance that doesn't seem to dwindle as time goes on? How much are you saving for your retirement, or are you saving at all?

With this information in hand, visitor a lender. This is something you want to do prior to looking of real estate to buy. A lender will help you get qualified and approved for a loan. A good lender will go over the finer point of understanding credit scores and what you can do to improve your credit history if needed.

Ideally, you will want to be pre-approved before house hunting. There is a difference between being pre approved and pre qualified. Pre-qualified indicates what you might be able to afford. Being pre-approved says that a lender is willing to provide a mortgage and that you have the ability to buy a house. Depending on your financial health, the time you expect to live in your new home - or how long you expect to own the real estate you are planning on purchasing, your risk profile will determine what type of mortgage you will want. Find out if there are any pre payment penalties, what is the interest rate, are there any points, how long is the mortgage term. With this information, you can now determine real estate is in your price range. Now go out and look for that dream home you want to live in.

First Time Home Buyer