Excited, nervous, stressed, maybe even a little sad. These are all emotions you might feel when you’re buying a home, even if you’ve planned to make the jump to homeownership for months. All of these feelings are totally normal. Knowing and understanding the emotions you may feel when you buy a home can help you manage and tackle them and may also help you make smart home-buying decisions.
We’ll take a look at a few of the emotions that can come with buying your first home.
Why Do You Want To Buy?
Emotion will typically drive your desire to buy a home. You might feel frustrated with your current living space or excited about the opportunity to experience life in a different area. Here are some of the most common reasons for making the jump into homeownership:
- You’re tired of renting. You might feel frustrated if you’re renting a home or apartment that your money isn’t going toward building a future for yourself. It’s true that renting doesn’t help you build equity, but it’s important to remember that owning a home is almost always more expensive than renting. This is true even if your monthly mortgage payment is lower than your rent. We’ll get into the full expenses of owning a home in a later section.
- You’re excited about a new investment opportunity.I f you know that there's an underpriced home on the market, you might feel excited to dive into this investment. However, you should always remember to do thorough research before you make such a big move.
- You want to build a space for your family. Maybe you want to buy a home in a better school district because you’re planning to start your own family. Maybe you want to buy a home in a different city to take a new and exciting career opportunity. No matter why you want to buy a home, you may want to embrace the joy of building a future and space for your family.
You might be feeling lots of emotions, but remember that you still need to do your homework before you dive into a home loan.
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Are You Ready?
Are you ready to buy a home? Many new home buyers underestimate the true upfront and financial cost of owning a home versus renting. Let’s take a look at a few considerations to keep in mind before you buy.
It’s normal to feel incredibly excited when you decide to buy a home. After all, buying a home gives you access to more space and allows you to build equity. But buying a home isn’t always the right decision. Be sure you ask yourself these questions before you buy:
- Am I ready to commit to this area? A mortgage can easily be a 30-year commitment. While you won’t need to live in your home for the length of your mortgage term, you’ll still need to make a long-term commitment to the area where you buy. If there’s a chance you might need to move for work or family in the next few years, buying might not be right for you.
- Am I ready for a new lifestyle? When your $5,000 HVAC system breaks down in your apartment, you can call up your landlord for a repair. When you own your home, that financial burden and repair falls on you. You need to be prepared to handle your own upkeep and maintenance or equipped to handle your own repairs.
- Am I ready to spend even more of my paycheck? From maintenance to homeowners insurance to HOA fees, owning a home is expensive. You may be barely making your paychecks last while renting, which might mean you’re not ready to own a home.
You’ll also need to consider a number of financial factors before you apply for a mortgage loan. Here are a few questions you should ask yourself before you apply for a preapproval:
- Is my credit score high enough? Your credit score is a three-digit representation of your reliability as a borrower. As a general rule, you’ll need a credit score of at least 580 to qualify for a mortgage loan, though many lenders require a 620 or higher.
- Do I have a large enough down payment? Contrary to popular belief, you don’t need to have a 20% down payment to buy a home. You may be able to buy a home with $0 down if you qualify for a USDA loan or VA loan. But if you don’t qualify for either loan, you’ll need at least 3% of your home’s purchase price in a down payment to buy a home.
- Do I have too much debt to buy a home? Lenders look at your debt before they issue you a loan. The more debt you have, the more likely you are to fall behind on your loan. Calculate your debt-to-income ratio before you apply for a loan. Let’s say your DTI ratio is higher than 50%. You might need to pay down some debt before you buy a home.
It can feel scary and intimidating to ask yourself these questions. But taking an uncomfortable look at your finances can be a necessary step to getting a mortgage. If you fall short of the qualifications you need to meet to get a loan, don’t panic or fall into despair. Create a plan to repair your credit, save more money or pay down your debt, and reapply at a later time.
Lenders require a large amount of financial information before they can approve you for a mortgage. Some of the information you might need to share includes:
- Your employment history. Your mortgage lender needs to know that you have a steady job and a reliable paycheck coming in.
- Your credit score. Your mortgage lender will want to see that you have a long, solid credit history. A high credit score indicates that you’re more likely to pay your bills on time and manage your mortgage well.
- Your income. Your lender will want to look at your income to determine how much you can afford to pay each month for your mortgage.
- Your investments and bank statements. Many lenders require that you have at least a few months of payments in savings. It ensures that you’ll be able to pay your bills if you lose your job or run into financial hardship. Your lender may also consider retirement and investment accounts as assets that contribute to your overall savings.
It can feel very uncomfortable to share this information – many people consider retirement savings and income to be very personal details. Try to remember that your mortgage lender isn’t passing a moral judgment on you or your family when they ask for this information. They’re simply assessing what you can realistically afford to pay back before they extend you a loan. The last thing you want is to receive a mortgage loan you can’t afford.
After you submit your request for a preapproval, the only thing left to do is wait for a decision from your lender. You might receive a preapproval instantly or you might need to wait for your lender to contact you for more information. Either way, it’s normal to feel nervous while you wait to hear back.
If you get a preapproval that’s for an amount at least as large as you were expecting, you’ll feel relieved and overjoyed. However, if you receive a rejection or a preapproval for less than the home you want to buy is worth, you can feel devastated.
Try to remember that a mortgage rejection isn’t a life sentence. Take some time to reassess your finances, save up for a larger down payment and improve your credit score before you reapply. You’ll likely find that getting the approval you want is much easier the second time around, particularly if you have a plan.
The Home Search
For most buyers, the home-shopping process is the most exciting part of buying a home. You get to view potential homes, explore new possibilities in each space and weigh the pros and cons of each home. This flood of emotions can easily make shopping for a home overwhelming. Before you shop, create a list of “must-haves” for your future home and share this list with your real estate agent. This will help them customize your search and zero in on the perfect property.
You might also feel nervous about any potential renovations and repairs certain properties may need. It can be tough to gauge just how expensive a kitchen renovation or electrical repair might be before you get an estimate. You may want to spend less on your home than you can afford if you’re considering buying a home that needs renovations. This will leave you with a financial safety net in case your repair turns out to be more expensive than anticipated.
Making An Offer
Submitting an offer can be overwhelming and nerve-wracking. Sure, the seller might accept your offer outright, but they also might also come back with a counteroffer or even a rejection.
It’s a good idea to let your real estate agent handle the bulk of the work when it comes to submitting an offer. Your agent is a local real estate expert who knows what homes in your area are generally worth and how to write a legally sound offer letter. Consult with your agent when you decide how much to offer for the home and leave him or her to draft the letter.
Negotiating your home’s price is often the single most stressful part of buying a home. It can be tempting to fall into a bidding war with other buyers and continue to up your offer. This can leave you with a mortgage you can’t afford. Resist the urge to spend more than you can afford on a home, no matter your budget. Your real estate agent can help you know when to walk away – and can show you new properties you might love even more.
The Waiting Period
You’ve submitted an offer and the seller accepted – nothing to do now but head to closing, right? Not so fast. There are a few more steps that you need to complete before you take control of your property:
- Appraisal: An appraisal is a rough estimate of the amount of money your home is worth. A home value expert called an appraiser will visit your property, take a look around and issue a judgment on your property’s value. Lenders require appraisals because they can’t loan out more money than a property is worth.
- Inspection: An inspection isn’t the same thing as an appraisal. During this process, your inspector will look for specific problems in your home. He or she will then provide you with a report that lists everything that needs to be repaired or replaced on your property. Though lenders don’t usually need inspections before they offer a loan, you should always get one before you buy. Your inspection results may reveal an expensive or even dangerous issue with your home that you didn’t realize was there.
- Underwriting: Underwriting is the process that lenders use to make sure you qualify for a loan. During underwriting, your lender will look at things like your bank statements, investments and credit report. If you were honest and upfront when you applied for a preapproval, underwriting usually happens without a problem.
It's normal to feel nervous and anxious during these processes. Unfortunately, the results of your appraisal, inspection and underwriting are out of your hands as a buyer. Respond to lender inquiries quickly and stay in touch with your agent for the fastest closing possible.
Closing On Your Home
Closing is the last step when you buy a home. During the closing, you’ll pay your down payment and closing costs. Your seller will then relinquish control of the property to you. Enjoy the feeling of pride, relief and accomplishment in the days leading up to closing. You’re officially a homeowner!
It’s normal to feel a massive mix of emotions when you buy a home. You might feel relieved that you’re finally ready to make the move from renting to buying. You might feel afraid that you won’t be able to find a home or that you won’t qualify for a loan. You might feel overjoyed at the new possibilities that await you during the home shopping process. You might even feel a little scared that you’re making the wrong decision before you submit an offer.
These feelings are all normal. No homeowner feels only joy throughout the shopping process. The key to managing these emotions is to anticipate them, understand them and try to set them aside when it comes time to make rational decisions. Your lender and real estate agent can offer valuable third-party perspectives throughout the buying process.
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