Most homebuyers start their search for a home by looking online, or going straight to a Realtor asking to be shown houses in this town or that town. The truth is that the first step in the prospective homebuyers search should be to meet with a mortgage advisor. Why? Because the right mortgage advisor can answer two very important questions: how much can you qualify for, and how much can you afford.
The first meeting between a mortgage advisor and prospective homebuyers will typically start with the mortgage advisor asking the proper questions, looking at all the numbers (income and debt), and running a credit check. From there, the mortgage advisor will figure out how much mortgage the homebuyers can qualify for. Often, that number won’t match up with what the homebuyers think they can afford, so the next phase of the meeting involves some more in-depth questioning. A good mortgage advisor will ask questions such as: What are your spending habits? Are you a shopper? Are you a car person? Do you like to travel? Are you frugal? Do you plan on living in this house forever? All of the answers to these questions will help determine what the homebuyers can afford, giving them a good, solid number to go and talk to a realtor with. The homebuyers can then confidently say, “I can afford a $250,000 purchase price, and I can put 10% down, so let’s start looking in the $200-250,000 range.”
Interestingly, in today’s world of tightening mortgage guidelines, many people think they will qualify for a lot less than what they can afford. I have actually found that it’s the exact opposite; I see a lot of people who can qualify for a lot more than they can afford. A large part of that is because many of the buyers I’m seeing right now are people who are taking good care of their credit, who do not have a lot of debt, and have really prepared over the last couple of years to buy in today’s market by educating themselves well enough to understand what kind of position they have to be in to make a home purchase.
I talk about this all the time, but it’s something a lot of people don’t consider: what you can afford and what you can qualify for also depends on the property taxes. Property taxes vary from town to town. If you’re having a tough time finding a home in the town you really want because the taxes are high, maybe you can afford a little more house in a different town that has cheaper property taxes. In New Jersey, for example, Essex County in general has very high property taxes, so you may need to go to the west to find the house you want.
At any rate (pun intended), if you’re a prospective homebuyer, your first step should be to meet with a mortgage broker. The sooner you do this, the sooner you can find out how much you qualify for and how much you can afford. Maybe you’ll find out that you’d be in a better position if you waited a year because you could save more money for a down payment, allowing you to afford a house in the town you want; or maybe you’ll need to address some debt issues that will put you in a position to qualify for more house in a year. On top of that, perhaps the mortgage advisor will identify some general credit issues that can be fixed, which can increase your credit score enough to help you qualify for a better rate.
There are a lot of reasons to meet with a broker as early as possible, if not a year before when you’re really thinking to buy. And of course, it costs you nothing! If you’re considering purchasing a home, give me a call or send me an email – we’ll find the right mortgage for your lifestyle.