Buying a home is a unique experience for most people. It is one of the most significant financial decisions of your life—and it can be challenging for people to leave emotions out of it. Why? Because people envision their lives and future inside of the home they wish to purchase.
Don’t let your vision of the future encourage you to make shortcuts now, even ones you may perceive as minor. With real estate, the long-term benefits of honesty will put you in your dream home.
Be Honest With Yourself
Because the purchase is so significant, take an authentic look at your financial position. Ask yourself if you are ready. A mortgage calculator lays out your monthly payments, but what kind of budget do you have for home maintenance and repairs? If you intend on building a family, will the space in this house suffice? Is your job secure?
By answering these questions now, you will go into the home-buying process with the ability to capitalize on the right purchase.
Pre-Approval Is Simple
If this is your first time buying a home, you may be surprised by just how easy it is to be pre-approved. You can do it online without ever speaking to anyone. There are questions about your income and your debt. Be specific. Don’t round your salary up (or down). Before your loan is finalized, everything will need to be proved. If your paystubs don’t correlate with the amount you listed in your application, then your loan could be in jeopardy.
Another issue that may trip people up is gifts. For example, your parents might want to give you money to help you with your first home. When large sums of money are deposited into your account, this, unfortunately, can be perceived by lenders as a “suspicious dump” of funds. The mortgage broker will likely ask where it came from. If you have recently received a financial gift, explain that. If you plan on receiving such a gift then notify the mortgage lender of this in advance. Whoever gave you the gift will probably have to create a signed statement detailing they don’t expect to be repaid. However, if someone in your family loaned you money, that is not a gift, and you shouldn’t label it as such.
Will You Live In The House?
Be upfront with your lender about whether you intend on living in the house. Do you want to rent it out? There’s nothing wrong with getting a loan for an investment property. Issues will arise if you state that you will live there when you have no intention of doing so.
Keep in mind that the loan for an investment property usually comes with a higher interest rate. Why? Because there’s an increased risk of default if you are wholly reliant on a tenant to cover your payments. However, lenders could still proceed with the transaction once they know the plan by assuming more risk…by you paying more interest!
Auricchio Law Offices
Make one of the most significant financial decisions of your life without someone protecting you and your interests. If you are ready to sell your home or want to purchase one, contact Auricchio Law Offices for a free consultation. We are proud to represent clients throughout Chicagoland and Northwest Indiana.
Auricchio Law Offices
Latest posts by Auricchio Law Offices (see all)
- Chicago’s Commercial Real Estate & An 89% Loss - April 15, 2024
