It might be the most expensive purchase you’ve made to date. Whether it’s for the first time as a self-employed individual, an investor, or a business owner, or if it’s another stepping stone on your journey to achieving your dream, buying a home is a process that takes weeks or months to complete. A marathon instead of a sprint, if you will.
It’s easy to get lost in the details and life doesn’t stop while you’re shopping and getting a mortgage in place. If you are devoted to getting a startup off the ground, streamlining your real estate investment income, or pitching to VCs rather than waiting by the phone for the realtor to call, a home buying checklist will simplify and organize your shopping experience.
Determine payment affordability
Odds are that you have a good idea what you’re looking for in a home, whether it’s a specific location, size, style, and whether it’s a primary residence or an investment. Can you float the payments that are attached to it? Before seriously looking at properties, determine how much house you can afford.
Traditionally, affordability calculations account for a DTI of 43% to qualify for a conventional mortgage. Your monthly financial obligations must tally up to less than 43% of your monthly income, so determine how much headspace you have between your commitments and your income.
If the gap is relatively small because you aren’t paid on a typical salary basis, for example, you may need a non-conventional or non-QM mortgage. Set a dollar figure that you can comfortably pay for your mortgage per month.
Establish a budget
Based on your monthly payment affordability, firm up a price range for homes you’d like to look at. Max out at the upper end of your affordability, and don’t consider properties that exceed that price. This budgeted amount may need to change if you’re unable to get pre-approved for a mortgage, but it’s where you need to start. It’s more complicated to increase your budget later, although not impossible.
Find a mortgage lender
Nothing is more defeating than if you were to find your dream home or the perfect investment and not be able to get funded. Prior to hitting the market with a realtor, find a mortgage lender that can fit your needs. For investors and self-employed professionals, traditional banks often can’t or won’t help you, or they make you jump through hoops or place limitations that aren’t feasible. MBANC offers non-QM mortgage products that help you succeed rather than frustrate you.
Choose a realtor
With a pre-approval in place, find a realtor that has a high success rate working with people in your situation. Ask for referrals is you know someone you trust in the area you want to purchase. Otherwise, seek out real estate professionals with high ratings that list and sell properties in the price range and neighborhood you want.
Key attributes should include honesty, able to be reached easily, open lines of communication, and extensive knowledge and professionalism demonstrated all the time.
Shop for homes
The enjoyable part is shopping for a home. Armed with a shortlist of properties that fit your price range and needs, walk through each one to find a suitable property. Although it becomes an emotional decision, keep it as objective as possible as you scour the houses for pros and cons. Despite the advice and recommendations you may seek from your realtor, choosing a home is truly a decision you need to make for yourself.
Negotiate the deal
After selecting a property, make an offer and negotiate the price. This process should be performed armed with market comparisons and appraisal information, if available, to ensure a mortgage approval uninhibited by an undervalued property.
Some housing markets can be extremely hot with multiple competing bids. Despite the frenzy, attempt to have your bid subject to a home inspection, preventing unexpected issues from plaguing your investment.
Apply for a mortgage
With a deal in place, apply for a mortgage approval. Your mortgage professional will let you know everything you need to supply for an approval, whether that’s W-2s, rental income statements, bank statements, or a 1099.
With MBANC, rapid funding and easy applications for non-QM home buyers are what we do. Since processing, underwriting, and funding is all in-house, there are no long delays to getting approved.
Get a home inspection performed
Get the property inspected to satisfy your conditions of sale. An industry professional should be hired to perform the inspection. Ensuring that it’s done quickly after the mortgage approval is essential since most conditions have a short time frame attached to them. If the home inspection satisfies you, have your realtor notify the seller that conditions are met.
A mortgage in place and conditions met, you’re ready to close on the property. Not sure how to get to this stage? MBANC is here for you. Whether you’ve just started considering a move or you’re ready to start shopping, get pre-approved for a mortgage with MBANC.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.