Fight the fear: Prepare to buy a home before you ever start looking

___

Published Date 6/7/2024

Buying a house is the biggest expenditure any of us will ever make. The prospect of owing hundreds of thousands of dollars is often intimidating, even as the excitement of becoming a homeowner grows.

Realtor.com’s Stephanie Booth puts it this way: “This emotional roller coaster can be partly explained by the fact that “money represents so much more than just currency,” citing certified financial advisor Emily Stroud. “Consciously or not, you may equate money with power or safety. As such, funneling a large portion of your dough toward a home can be nerve-rattling.”

The stress of not messing up is enormous, agree many financial planners. So Booth offers some “Jedi-like” mind tricks that can help you navigate the scarier parts of the mortgage and home-buying process.

First educate yourself on how to get a mortgage. Yes — educate yourself, because the level of financial literacy in America is dismal according to most experts. Money is often too taboo to be spoken about in the home, and isn’t well-taught in school either. It means working hard to understand the information you need when it comes time to buy a home.

Booth says to take baby steps. Become familiar with a home affordability calculator — a tool that crunches the numbers instantly on your income and debts and estimates what price house you can afford. “Once you can do that without hyperventilating, you can research the more nuanced idea of debt-to-income ratio (how much you owe versus how much you make) and making sure yours is no more than 36%.” Why is that the high watermark? Because any higher than that, you may not comfortably buy a house and keep your shirt.

Another good way to ward off the heebie-jeebies of taking out a mortgage is to talk with friends or family members who’ve purchased a property — the folks who have experienced the same anxiety you’re feeling. Let them share their own experience and see if they might answer any questions you may have. “You know your Uncle Fred who managed to buy a great home after bankruptcy?,” asks Booth. “Your worrywart friend who’s already on her third home? Now’s a good time to ask them to share their secret sauce.”

Now it’s time to learn your ABCs — before you make open houses a hobby. Study up on the basics of applying for a mortgage, making a payment, and some of the costs associated with being a homeowner. Read up on private mortgage insurance, closing costs, homeowners’ insurance, the ins-and-outs of buying a home controlled by a Homeowners Association, and on and on.

Getting familiar with some of the key terms and major steps is like exposure therapy.

Then get thee to a mortgage lender before you even set foot in a house for sale. “This pro can walk you through the steps you need to take to get ready for the home-buying process IRL,” says Booth. “For one, he can tell you exactly how much money you’d be pre-approved for, so you can shop for houses you know you can afford.” Once your financial affairs are in order, you’ll be able to enjoy the process of purchasing a new home without fear and anxiety.

And remember. It’s a free country. You can “shop” for a mortgage. You not only should make it your business to find a professional you click with, but also to ensure you get the very best interest rate, which can vary from lender to lender. “The difference of even a quarter of a percentage point could save you thousands throughout the life of your loan,” says Booth. “And remember, although you’re borrowing money from them, they’re still working for you.

Booth suggests that all home buyers should meet with at least three lenders and compare what they have to offer. A mortgage broker can survey all the options on your behalf just as a trustworthy Realtor can help you find a home that suits your needs.

Now breathe. After doing all that, you have a right to move forward with both hope and excitement.

Realtor, TBWS

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

Licensed by the NJ Department of Banking and Insurance; Licensed Mortgage Banker - NY Department of Financial Services; Licensed Mortgage Banker - CT Department of Banking; Licensed Mortgage Banker - PA Department of Banking, Licensed Mortgage Lender – FL Office of Financial Regulation

All rates, fees and programs are subject to change without notice.