Fitzgerald Luxury Group will help you prepare and decide if you’re ready to make one of the biggest purchases of your life. When considering what home to buy, the community can be as important a consideration as the real estate itself. Flanked by The McDowell Sonoran Preserve, Scottsdale offers many residential desert-style neighborhoods, each with their own character. Expect golf course communities, pedestrian-friendly communities, family friendly communities and master planned communities that include plentiful scenic trails for hiking, biking, running or nature walking.
We’re here to help you navigate all your LifeStyle preferences. Here are our 8 tips to getting you closer to your dream home.
- Pay Off Small Debt
Before you apply for pre-approval for a home loan, it’s important to pay down any small outstanding debt. Chances are you have some student loans, don’t worry about these as much as credit card debt, car payments, and any other monthly payments you might have. However, if you can pay down some of your student loans, that’s great, but no matter what, make sure you don’t miss a payment.
- Do the Math
Once you’ve paid off some of your smaller debt, it’s time to look at what you CAN afford, not what you THINK you can afford and put the numbers down on paper. Lending institutions typically follow the 28/36 rule, which means that your mortgage payment, property taxes and insurance should not take up any more than 28% of your monthly gross income. Add to that your total debt payments, including college loans and credit card debt, which should not total more than 36% of your gross income. Your monthly mortgage payment (payment, taxes, homeowner’s insurance) should be less than 25% of your monthly income after taxes. Check out this affordability calculator from Zillow http://bit.ly/2rfG4Pi.
- Build a Savings
You’re going to need to have money for a down payment, possible closing costs and home inspection. Putting down as much as you can for the down payment will determine the duration of your mortgage and its monthly rate. Homebuyers typically put down anywhere from 3-20% of the total mortgage cost.
Increasing your down payment will make you eligible for loans at lower interest rates. Furthermore, when you put more money down at signing, mortgage lenders will provide you with more wiggle room as far as how much you can borrow. If 100% financing is your only option, the Federal Housing Administration (FHA) and Department of Veterans Affairs (VA) offer programs. But when you go this route, you will have higher interest rates and, in most cases, will need to take out Private Mortgage Insurance (PMI).
The closing costs are typically between 2-5% of the purchase price but you can often request that the seller covers closing costs and you pay a higher purchase price if you’re cash poor, this is usually stated in the initial offer. Here is a closing cost calculator https://smartasset.com/mortgage/closing-costs to determine how these will affect your wallet.
You’ll need to apply for pre-approval for a home loan to show proof of mortgage eligibility. Home loan pre-approvals are generally drawn up with very little information and give you a sense of what you can afford. It’s the loan officers who draw up these documents, but it’s the underwriters who will be approving you for the loan and they have much stricter guidelines. Look for a house within your pre-approval rate to help you secure the loan you need and ensure that you can afford it.
You’ll need to take your W-2 statements from the last two years (three is better), up to date bank and investments statements, and a driver’s license and social security card. The loan officer will also run a credit check and contact employers to verify employment and salary.
- Call Fitzgerald Luxury Group and Shop Around
There’s no out of pocket cost to you, the buyer, for having your own agent, we simply get a cut of the agent commission from the purchase/sale of the property. It’s important to have us on your side to give unbiased advice, negotiate with sellers and the bank and explain all the real estate market lingo.
- Starter Home vs. Forever Home
What’s it going to be? Are you looking for something small to start and learn while building up some equity for a few years? Or looking to settle down in one place for an extended period of time? There are benefits to both but either way you should make sure you can commit to the house for at least 5 years because there are tax benefits that don’t kick in until year three. More than likely, most houses will need some cosmetic updates, figure out what’s a priority and go from there.
- Home Inspection
Once you decide on a house, it’s time to put in an offer, which we will walk you through. Once the offer is accepted you can move forward with a home inspection because every home has its secrets.
A home inspection is generally a requirement, but even if it isn’t, make sure you get one. They are an out of pocket expense to you as the buyer, but a home inspection can reveal significant issues or affirm that the house is sound. The biggest things to pay attention to on the report is the roof, the plumbing, the foundation, and your heating/cooling system. If any of these things were to have issues shortly after purchasing, it could cripple your finances.
This is something the whole millennial generation struggles with. The home buying process is not short and sweet, it can be rocky with a thousand tiny loopholes to jump through, but in the end, you will get your reward. And it’s called HOME.