The real First Steps to starting a Home Search- Evaluating your Budget and Savings

Buying a home impacts your personal finances in some way – whether you pay cash or finance a mortgage. Unfortunately, many home Buyers don’t always look closely at their financial picture before starting their search. The road to a disappointing home search begins by relying only on emotion rather than financial facts. Here are thoughts for improving your success rate.

Scenario: On your own you hop in the car, look at houses and find the perfect home. Later you discover from a lender you can’t really afford the house. Perhaps, there is a credit issue that will take time to repair. Or, you will have to stretch your budget to make the purchase. Do you try to talk yourself or your family out of that home because you really can’t afford it? Or, do you decide to buy knowing there will be tradeoffs each month in order to make the monthly payments?

Begin this way – determine what is affordable for you:

First, take a serious, realistic look at your current financial picture and budget. List your monthly expenses? You’ll find some are necessary while others are not.

Look at the long term financial impact of a new, higher mortgage to your current lifestyle and savings goals. Can you afford to pay more every month towards a mortgage payment? What is a comfortable amount that won’t stretch you unnecessarily?

Look at savings. You should always have an emergency fund of savings in addition to any other savings goals you may have. Buying a home should not impact any emergency funds or your ability to save. You always want to be financially prepared for the expected events in life and for emergencies. Of course, you want to have the finances necessary to maintain your home over time and to protect your investment.

Remember, buying a home requires upfront cash so look at how much you are willing to spend on down payment, inspections and other costs involved with the purchase. Val and your lender can provide you with an estimate.

Knowing what you can afford to spend both in a monthly payment and from savings will go a long way toward helping you make good, sound decision about purchasing a home.

Three reasons for reviewing your finances before beginning the Home Buying Process:

• Keeps you in Control of the process because you are working with an amount that fits your lifestyle and financial goals.
• Allows you to make a Sound Decision by using your budget and goals as a basis for decisions made with lender information.
• Gives you an advantage during negotiations. Any offer to purchase should be accompanied by a document from your lender verifying you’ve started the loan process. This may strengthen your position with the Seller.

Now you’ve taken a very important step toward purchasing a Home. You and your family can focus on finding the perfect home because when you find it you are better prepared to make an offer and to begin the purchase process!

If during this hard look you find financial issues that need to be addressed here is one of many sites that may help:

http://www.daveramsey.com – Get REAL debt help: Dave Ramsey’s Total Money Makeover Plan