Purchase Education

Everything You Need to Know!

Preparing for a home purchase can be overwhelming for both new and previous homeowners. From dealing with endless amounts of paperwork to making sure your loan will close on time, the process can be a lot. However, the home buying process can be turned simple and successful with the right education!

At Robison Home Loans, we guide potential homebuyers through 3 steps before they purchase a home. These steps make sure potential homebuyers don’t fall into the “house-broke” problem (when you buy your dream home, but can’t afford anything else) unless they want to. Our steps make sure that you get into a house that’s a right fit for both your family and wallet!

Let’s dive into the 3 steps you need to take before buying a house!

  1. 1. Figure Out What You Really Want

We all want that dream home! A huge house, lush and spacious backyard, and several amenities that cater to you and your family. However, the first time you make the payment may make you reconsider that expensive house.

Most people don’t have $500k in cash to purchase a home and when we hear that kind of price we have no idea if we can afford it or not. In this first step, we run specific numbers to fit your scenario. Once you know the monthly payment and the amount of money you need upfront, it makes it easier to know what house price will fit your budget. This step of the process digs deeper than just the down payment and makes the closing costs, prepaids and impounds (taxes, interest, and insurance) clear. These costs can be a huge surprise if you don’t calculate them before you find the house you're going to buy. By calculating both the monthly payment and funds needed for cash to close, you will know the top purchase price that fits your budget!

  1. 2. “The Qualifying Stage”

Now comes the qualifying stage! There are 3 main things that we need to look at to see if you can qualify for the home purchase price you want to go up to.

• Credit: Credit score is a numerical representation of your trustworthiness in paying back debt.
• Debt to Income: The ratio of the borrower’s total monthly obligations, including housing expenses and recurring debts, to monthly income. It is used to determine the borrower’s capacity to repay the Mortgage and all other debts.
• Loan to Value: The relationship, expressed as a percentage, between the amount of the proposed loan and a property’s appraised value or purchase price. For example, a $75,000 loan on a property appraised at $100,000 is a 75% loan-to-value.

Credit will look into your credit score and see if you qualify. Things to consider for this:

• Do I have enough credit?
• Have I ever had late payments on a mortgage?
• Have I ever had a foreclosure/bankruptcy?

Debt to Income is as important in the mortgage process as your credit score or job stability. It gives lenders a bigger picture of your monthly expenses and decides how much you can borrow.

Loan to Value is really about your down payment for the house. When you see Loan to Value, think to yourself “How much do I need to put down.” Although this is a future cost that occurs near the end of the entire transaction, it is still necessary to have the amount planned!

At the end of this stage, you should know if you qualify for the top price you want to spend. If you don’t qualify, you should know the amount you do qualify for if any and what you would need to do in order to qualify at the top price you had selected.

3. Home Search Planned

This step is heavily dependent on working with a top quality realtor. Your realtor should have a plan for you and the plan should get easier as you move along in the process. Their job is to slowly eliminate houses and narrow down your search for your perfect home! When it comes to narrowing down your search, think about these three things:

• Define what specific geographic locations you want to live in
• What specific features/amenities would you like the house to have
• Type of house (architecture style)

If you don’t have a top quality realtor we can connect you to several local realtors across North County San Diego!

By following these 3 steps, you should be prepared to tackle the home buying process! Although intimidating at first, the home buying process can be a smooth and memorable experience if done in the right order with trusted advisors. Ready to start your home buying journey? Click below to fill out our form to get started!