Rex Chan, Realtor

Tuesday Tips: 5 Tips For First Time Home Buyers 1. Find the Right Home for You Before a prospective homeowner can begin the quest towards purchasing a home, the...re are many factors to consider, most of which are determined by some basic facts and assumptions. How big is your family? What neighborhoods are you willing to consider? Are schools a factor? Is a single-family home a requirement or is a condo an option? Based on your income and assets, what kind of home can you afford? For some home buyers, living in a specific neighborhood takes precedence above all else, whereas for others, the home itself is more important. In a perfect world, you’d find the ideal home, in your neighborhood of choice, at a price you can afford, but realistically, most people will have to make some compromises. 2. Save for a Down Payment Nearly all mortgage loans and lenders require some amount of cash as a down payment (usually 20%). The amount you've set aside for this will determine the kind of mortgage you qualify for. It will also impact how much you can afford to borrow for a home. 3. Calculate What You Can Afford Many banks will require that your monthly costs can't exceed a percentage of your income (for example 28%). That means if you earn $50,000 per year, your total monthly housing costs should not exceed $1166 (28% of your monthly income). But it's more than just your income that the bank will look at... In addition to your income, if you have recurring debts, the total monthly payments on existing debt plus new payments for your mortgage may not be allowed to exceed a certain threshold (for example 41%). Using the example above that would mean that if your monthly debt payments are in excess of $541 per month (bringing your total debt of $541 + $1166 = $1708 or 41% in total) 4. Compare Mortgage Lenders One of the number 1 mistakes made by home buyers is NOT shopping around for a mortgage! Your Realtor knows a guy, or maybe your parents used a mortgage broker in the past. Don't fall into this trap. It can take some time, but you're going to have your mortgage for the next 30 years, so it's really worth prioritizing. Also, don't assume you can shop one mortgage lender today and another one next week. There is market volatility in the mortgage market so you really need to sit down and get ready to contact a few banks. If you do it now, odds are good you can lock in your rate for a while. 5. Get Pre-Qualified By this point, you should have a pretty good idea about what kind of home you’re looking for, and the neighborhood you’d like to live in. You also know how much you've saved for a down payment, which in turn will determine the type of loan you should pursue. If you've compared a few rates you should request a pre-qualification letter. If you have any questions, please don't hesitate to contact us or reach out to one of our Sequoia agents. #tuesdaytips #buyingahome #firsthome #realestate