Okay so me and the Mrs are house hunting. How do you get started? If you Google “steps for buying a home” you’ll get a lot of websites with different number of steps. Some break it down into 5 simple steps; others detail it into 11 – 25 steps complete with graphs and flowcharts. Many make it sound like you must go through the steps in the order they present and to do otherwise would throw the universe into anarchy.
As you might expect, the reality is somewhere in between. What these sites really do is take the two most basic steps and break them down into sub-steps. While there are common milestones in most home sales, there’s no such thing as a “routine” real estate transaction especially these days.
As someone who is deviating from the normal “script” quite a bit, my intention for this blog is to walk through the steps we are going through and tell you what we are doing at each “milestone.”
For anyone buying a home, it essentially it does boil down to
• Figuring out how much home you can afford
• Figuring out where you want to live
These two concepts are more related than you might initially think. Your income & credit might get you a condo in the Gold Coast, or a townhouse in Lincoln Park or a Single Family Home (SFH) in Lake View. Or you might be surprised to learn none of these are options for you because you simply don’t earn enough or are like my wife and I, already own two properties.
Almost everyone I know is in this second boat. We all bought into the idea of a condo as a starter home and now in the post-boom bust, we are stuck with properties we cannot sell. So some of the top notch neighborhoods in Chicago are out of the question for us. To be honest, I really didn’t want to live in Lincoln Park anyway.
In order to know for certain, however, you have to get pre-approved. You’ve probably seen those ads that promise “the lowest interest rate possible with our brokerage”. They imply that they can somehow give you a lower rate than anyone else.
House Hunting Lesson Numero Uno: A mortgage broker doesn’t give you a good rate — you give you a good rate. If you have good income, stellar credit and very little debt, you should qualify for the lowest rate possible. If you don’t, no broker in the world can help you….legally anyway.
That said, different brokers have access to different loan programs with different fees and requirements, so shop around as they say. You can visit as many lenders as you like and get several pre-approvals, but keep in mind that each one carries with it a new credit check, which will show up on future credit reports. I have a few brokers under my belt because one handles construction loans (in case of fixer-upper) while another does streamlined FHA loans. It’s important to keep your options open when it comes to loans and houses.
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