Buying a home, first things first…
So you’ve decided to buy a home; congratulations - now the fun begins!
Actually, it can be very “un-fun” for first time home buyers on Long Island if you don’t properly prepare. Buying a home is an important building block of a family’s financial future, but the best results and overall experience can be attained only after careful planning.
Count the small stuff!
To most accurately figure how much of a mortgage payment you’d be comfortable with on a monthly basis, determine how much you spend every month. On everything. Not just the big items like car payments, student loans and credit cards, but the many daily costs that can add up to surprising amount. Besides the cost of car insurance and gas, your cell phone, food and entertainment, there’s all those latte’s, lunches, medical co-pays. Even a newspaper subscription can cost over $30 a month.
Now subtract that total from your after-tax paycheck. Lenders will calculate your maximum mortgage amount by using your full income, but we all live life and pay bills based on the amount left after taxes, medical insurance and 401k deductions. This is the actual amount you have to spend each month and is what your mortgage decisions should be based on. It’s so important that your home buying choices are based on realistic and complete information, so take the time to plan accordingly.
Prepare you documentation: The more complete and accurate your mortgage documentation is, the quicker and more accurate the results will be. Make it easy for the lender to quickly Pre-Approve you. Gather your federal tax returns for the past 2 years, 2 months paystubs and two months bank statements.
Cash Reserve
It’s important to have a financial cushion - savings left over after your down payment, closing costs and moving expenses. Six months of living expenses seem to be the often-quoted standard. If that’s not realistic, make sure you have at least two or three.
Research
So much information is available on-line, so take some time to read through various sites to familiarize yourself with a basic overview, resources and options available. Even if it doesn’t all make sense at first, it will be a base of knowledge to start with.
Your local Multiple Listing Service (MLS) will show most of the homes for sale in the towns you are considering. This on-line resource is easily searchable and will give you an idea of what’s available and at what cost in price and real estate taxes. It’s a quick and easy way to set the right framework for your home search.
Pick your team
You’ll be relying on the information, advice and assistance of a few key players (an attorney, realtor and lender), so start asking friends for those that helped them. Get a list of names and call each to discuss your home buying plans. See how they respond, what info they share and how you feel speaking with each professional. If they were referred to you, then they can get the job done. From that point, it’s all a matter of a “gut feeling”; pick the ones that you feel most comfortable with and set up a time to meet. If someone doesn’t pleasantly accommodate you, move on to the next. Ask questions and compare answers. If you still don’t understand something, ask again! These people are there to help; it’s their job, so feel comfortable in using them as a resource.
Most importantly, have fun. Buying your first home is a milestone and an experience you won’t soon forget. Throughout the process, keep your eyes on the prize and try not to get wrapped up in the minutia that will inevitably crop up.
