How do I begin looking for a home?

Asked by Lloyd Ghant, Longview, TX Sun Dec 21, 2008

Im not sure where to start and I am terrified of the loan companies out there. My credit is less than perfect but I have a great job and money saved for a down payment. I really want to get out of renting. I am looking for at least a two bedroom home.

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T.E. & Naima…, Agent, Dallas, TX
Tue Dec 23, 2008
You don't have to start with a loan officer, but it would help.

First, figure out your budget. How much do you spend repaying credit card debt, other loans, and so on. How much you spend on everything else. How much you save each month. How much on housing right now for rent, utilities and the like. Do you have any room? If you're spending all of your paycheck (which is hard to do if you've saved up a down payment), then you'll have to stay under your current rent.
There are also a couple of guidelines to consider. Banks don't want you spending more than about 40% roughly of your gross monthly income on all your debts, which would include your new home. Generally they also limit the property loan payment (with taxes and insurance) to about 33%.

Second, look around at where you want to live, and how much the type of house you want is priced at. If your type of house runs $100k, then you can figure you'll need about $900 a month to pay off a 30 year mortgage for a house like that. If you can't fit the $900 into your budget you figure in step 1, time to recalibrate. Either you need more monthly income or a less costly house.

Third, now you need to see where you stand on your credit. Getting the answer doesn't mean you're stuck with proceeding to borrow the money and buy a house. Loan officers don't charge you to see where your credit is and get a quote for a particular loan amount. You will be committing yourself when you start signing papers. Before that, you can check out the deals from a couple of different sources. Rates are at historic lows right now, but qualifying is more difficult than it has been in a decade.
Credit scores are important and they continue to climb upward out of reach of many people. When sub-prime loans died, reasonable alternatives to no loan at all died with them. So, you'll need to contact some loan officer somewhere to get past this step. You'll also get to learn about types of financing, like VA, FHA and conventional from your loan officer. Most of us loan officers went through what you're going through and don't charge anything until you're ready to sign a contract, and then that money applies to getting the loan for that property.

Fourth, now start the actually looking. You will know your budget and have gotten an independent opinion of what you can afford. Your looking should first focus on where and what type, and then narrow down the list by what amenities or other criteria you would like. Some people start the 'where' with which schools they want. Others start with the type and rule out condos (because they don't want neighbors) or rule out single-family (because they don't want to mow - but they could pay someone else), but how you prioritize your list of needs is your business. A Realtor can help you think this through.
Maybe 2 bedrooms is okay, but you can actually afford 3 and 2 would be harder to sell later, or maybe you just can't afford 3 because of your budget. Talk to your Realtor and get some sage advice. Many of us Realtors were once in your shoes and we want to help.

Typical buyers look around on the Internet or have Realtors send them listings that meet the buyer's criteria. Then, when something good pops up, their Realtors takes them out to see the property. Many buyers will look at a 8-10 properties before choosing. Some will look at dozens. The better you communicate with your Realtor, the less time you can waste seeing inside houses.

Just one word about credit. You might find out that your credit scores aren't that great and you need a little time to get your credit squared away. The time it will take is worth it. The rates do penalize people who have less than good credit. Last year it didn't matter if you had a 580. Now it does. Less than 620 pays a slight premium to those with 680 or better. The good news is that it can be fixed.
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Bill Eckler, Agent, Venice, FL
Tue Dec 23, 2008

Your first consideration should be to review your personal budget before visiting a loan specialist to determine your financial limits and get pre-approaved for a mortgage.

Once you have determined the extent of your price range you can comfortably consider the features, location, and price range to consider for your search.

With this accomplished you are no ready to begin your search. This can be done independently, using resources like Trulia,,, etc. or you can seek the assistance of a real estate professional to support you. Many people elect to do both, search independently and use a realtor.

One of the benefits of engaging a professional is they know the area and often have access to opportunities before they become public.....a wonderful way to find "best opportunities" and get the biggest bang for your buck.

Lloyd, the fact that you are requesting information is an indication that you are ready to make the move. This is a great time to be considering buying, one that presents real opportunity to buyers. Good luck.

Happy Holidays,
The Eckler Team

Michael Saunders & Company
1 vote
Dominique Re…, , 93704
Sun Dec 21, 2008
You would really want to start by getting prequalified. This will show you how much you can afford. Then you would contact a realtor who would find homes that meet your given criteria. I know you said you are terrified of loan agents and I know there are a lot of horror stories going around but there are some really caring, knowledgeble, professional agents around! If you have a chance take a look at our website. There is a lot of information for buyers that you may find useful. I am available anytime to answer any questions you may have. Also, I noticed your uniform. The VA loan is an excellent benefit that you might be interested in.

Thank You,

Dominique Ressurreicao
Co-Branch Manager
American Pacific Mortgage
1 vote
Bill Carey, Agent, Charlotte, NC
Mon Dec 22, 2008
Talk to a local Realtor. There is no cost to you, just the time you take to sit down with a professional.
Here are 2 articles about home buying they each is short and straight forward.……
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