Five steps to consider when you’re buying your first house - KCTV5 News

Five steps to consider when you’re buying your first house

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Now that the sun is out and "For Sale” signs are up, it’s a popular time to buy a house. (AP) Now that the sun is out and "For Sale” signs are up, it’s a popular time to buy a house. (AP)

Now that the sun is out and "For Sale” signs are up, it’s a popular time to buy a house.

As a first-time home buyer, you probably have some questions. You might be wondering how much to save or what the process looks like. Before you jump into the market this spring, keep in mind that investing in property – whether it’s your current home or a new one – is a big decision that should be carefully considered. To help ensure your needs are at the center of your decision, take these five steps:

Assess your financial situation
Start by taking a comprehensive look at your finances. Before you make this significant purchase, know your resources, risks and opportunities. We recommend working with a financial adviser to review the following: savings, assets, liabilities, income, living expenses and your long-term financial needs. Also consider any large costs or significant life changes that might be on the horizon. Getting this information organized right away will set you up to make informed decisions and ease the mortgage application process later.

Get pre-qualified or pre-approved
A pre-qualification clarifies your options. It will give you an estimate of the loan you might qualify for, which gives you a sense of what you can afford. Depending on the answer, you may choose to wait and save. If you decide to buy and are within weeks of making an offer on a house, we recommend getting pre-approved. The bank will review your finances, credit score and mortgage application and approve you for a specific loan amount. This will help you seize opportunities when they come up, especially if you have an eye on a certain area, because you’ll already be approved for a loan amount. This can be a good move if you want to secure a low interest rate, and it usually carries more weight with sellers.

Think about (and discuss) your goals
Pause to consider your goals. Reflect on your own, but also talk to any others who may be invested in the decision, like your partner, about their goals. A frank discussion will clarify needs and wants for the short-term as well as your future. Depending on your life stage, investment goals and lifestyle, this can vary widely. Will this be the house in which you raise a family and retire? Is this an investment property? Is this your forever home that you’ll work on over the years or just the next stop? The answers will help guide your selection as well as where you look and at what price range. You may find that the house you need is different than what you originally envisioned.

Rank your priorities
Based on everything you figured out in Step 3, create your list of needs, deal-breakers and nice-to-haves. For instance, if you’re a light sleeper, houses next to a busy road may be a deal-breaker. Do some research and talk to others as you build out this list. Finally, rank your list to define your priorities. Knowing up front what you absolutely have to have, and what you could compromise on, will help when you’re searching for houses on your own or working with a realtor.

Line up your team of professionals
Figure out which local specialists you’ll work with before you need them. If you’re buying a property in another state, it’s especially important to work with local experts. Decide whether you’ll work with a realtor and, if so, whom. Their knowledge of the market can lead you to promising property more quickly, and they can help keep you informed of issues like tax laws, insurance needs and HOA fees unique to the area in which you’re looking. They’ll also be a good resource during the contract negotiation, where they’ll advocate for your interests against those of the seller.

It doesn’t matter if it’s your first or your fourth, buying a house takes time, careful decision-making and forethought. It’s easy to get caught up in interest rates, zip codes and property taxes, but the purchase comes down to three important things: your finances, goals and priorities. The sooner you sort these out, the better off you’ll be. No matter your situation, it helps to enlist the help of a financial advisor, who can help you sort through your different options and find the best solution for you.

Copyright 2017 Commerce Bank. All rights reserved.

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