Should I rent or buy? A loaded question with many factors to consider. Let’s start with location. Will renting cost less than buying in a given neighborhood? Have you considered surrounding neighborhoods that may be more affordable? Homeownership expenses add up fast when you factor in the down payment, closing costs, property taxes, insurance, plus upkeep and repairs. Even if you’ve been saving up, don’t reach out to a real estate agent just yet!
Will you qualify for a mortgage loan? Sonny Reynolds, founder and COO of AS IS Lending, says few homebuyers understand the importance of obtaining a no-cost, no-obligation prequalification from a mortgage lender, “it gives you a ballpark for how much home you can afford.” What are your credit scores, how long have you had your current job, and have you saved enough money for your down payment? The process is often done over the phone and doesn’t require a credit check, you simply report your income and debts such as auto loans, student loans and credit card balances. After crunching numbers, your loan officer provides you loan scenarios to compare and a prequalification letter to show sellers, which gives them greater confidence in accepting your purchase offer.
But buyers beware! Sonny cautions his clients to carefully define what ‘afford’ means to them, “just because you qualify to buy a particular home does not mean that purchase price is compatible with your financial goals.”
