The housing market has sky-rocketed in the last few years! There are many steps to purchasing a home so we will just focus 3 of the main steps. Always consult a financial professional before making a decision.

According to VOX, many people started purchasing homes in order to move into more rural areas since they were working from home. Now, almost 2 years later, people are still purchasing homes (including myself). In this week’s post I want to talk about the process of purchasing a home. Specifically the mistakes I have made, what I have learned (and what I will do to purchase my next home), and the “do’s” and “don’t’s” of the process.

Please beware that this is just advice based on my personal experience. This is by no means legal, certified or licensed advice.

My Mistakes:

Most people will tell you to get preapproved before looking for a house, however I disagree. I think the first thing any potential homebuyer should do is to evaluate their own finances.

Yes, it is important to see how much money you are approved to borrow before house shopping. However, it is MORE important to review how much you can afford, both upfront and monthly.

In order to know where to go you need to see where you have been.

A wave of emotion washed over me when I was approved for a loan. I got excited and started shopping that day. This was 9 months ago.

Now that I am close to closing on my first home I am evaluating my income and my expected expenses. One of my favorite’s pieces of advice in order to be wealthy is to live below your means. After taking a second look at my projected expenses I have learned that I will be spending just as much as I am making. Now, I am stuck with having to decide if I am going to cut down on expenses or increase my income.

This is something that should have been looked at before I even got preapproved. If I could go back I would have reviewed my budget. I would have looked at the net income (how much I make after taxes) compared to what I NEED to spend on a monthly basis. Depending on what the difference was I would calculate how much I would spend on a mortgage payment, utilities, insurance, etc. This would have given me a better idea of what I could afford rather than the bank or mortgage company telling me what I could afford by their preapproval.

What I have Learned and How I Will Prepare for the Future

The home buying process is very strenuous! Make sure to stay calm and organized through the process. There are a lot of documents and signatures needed so make sure to keep a level head.

I learned that in order to make the process smoother I made sure to send the documents and sign them as soon as possible. This gets the processor what they need as fast as possible so they can continue with the loan process.

Some things to have when going getting a loan for a home is this:

· 2 years of pay stubs from employer

o try to at least stay in the same field for the past 2 years)

· 2 months of bank statements

o show that you a) have the income and b) have enough money for the down payment

· Driver’s License

· Good Credit

o Ideally 680+

Everyone is different with different situations but having this information will make the process easier.

In the future, I will save as much as possible to put down on a home. Even though some loans allow for 3.5% down it is always a good idea to put down as much as possible. If you can put down 10% or even 20% of a loan it will drastically reduce the monthly mortgage payments. This means you pay off the loan faster and as you will be able to have more money to invest with.

“Do’s” and “Dont’s”

DO – continue saving and budgeting for your new home

DO – continue making any and all credit card payments (Pay them off if you can!)

DO – submit all necessary docs within 3 days

DO – stay up-to-date with market trends

DON’T – open a line of credit (buying a car, getting a new credit card, etc.)

DON’T – put a lot of money on your existing credit cards

DON’T – change jobs in the middle of your loan process

There are many rules and processes with purchasing a home. This is just the tip of the ice berg when thinking about buying a new house.

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Have specific questions? Leave them in the comment section below!