You’ve put in your time in a small townhouse, smaller home or condo and built up some equity but now you’d like to make that dream home a reality! How can you go about financing the home so you get what you want and still stay on budget?
For starters, you want to set realistic goals about the house you’re looking for. These are basic and broad goals such as do you want to live in a certain school district? Do you need a certain amount of square footage? How many bedrooms and bathrooms do you need? What type of neighborhood do you want to live in? These are large, broad requirements for your dream home. From there, you can narrow things down to certain details that you really love such as, large kitchen, updated bathrooms? Large backyard, mature landscaping, fenced yard, and any other little details you may want in a particular property.
Keep your broad, large items at the top of your focus and then narrow the homes down to items you love within those particular homes. From there, you can determine what you really want, what you can really afford, and if you’re ready to make the move to a dream home.
When it comes to financing a large purchase you may need a jumbo loan. Depending on how much equity you’ve built in your current home will determine how much down payment you can make on your next home. If you’re currently renting, you’ll need to come up with a certain amount of down payment. Speak to your lender about the exact figures you’ll need in order to qualify for your dream home.
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Other items you’ll need when it comes to financing a large loan is secure information. Your credit report will be one of the most important pieces of information that will get you either the home you want or rejected. You can request your own credit history for one of the three major credit bureaus in the United States: Equifax, Experian, and Trans Union. Typically getting one report should have every piece of information you need to verify your credit history, score and to correct any mistakes or errors.
Determine whether you want to buy your dream home or build a home.
In the Tri-Valley area, there are many new subdivisions and communities popping up all over the place in places like Livermore, Pleasanton, and Oakland. Are you considering buying an existing home, putting the final touches on a custom built home or building a home from the ground up on your own land? Financing changes for each one of these situations so you’ll need to talk to your lender about your plans and your real estate agent about what you’re looking for to find you the right home in the right lending program for your needs.
Determine your financial limit.
What you might think is your financial limit, lenders may disagree. Lenders will take into account all of your assets, liabilities, debts and income to determine a comfortable amount that can go towards financing each month. Typically no more than 30% to 35% of your income should go towards your housing payment each month. There are different programs and plans that may allow for more but remember, putting too much strain on your finances means that you won’t have any money for those emergency issues that may arise as a homeowner.
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Perhaps you’re in a similar boat to a lot of people; you already own a home but if the right dream home comes along you would consider selling and moving. To prepare yourself for the situation it’s important to have some reserve funds set aside for the down payment, earnest money deposit, and home inspection. You’ll be ready if the right home becomes available and you already have done your financial homework necessary to afford the home.
Start first by talking to a real estate agent about your needs. I can set you up with an alert system that sends you an email when a home that meets your search criteria and price becomes available. Secondly, speak to a lender about your credit history and your chance of getting a loan for the type of home you want. They can set you up to be in a good position, ready to make an offer, complete with a preapproval letter that can be updated monthly if necessary.