Financing a Home

Everything you need to know to prepare for a purchase

Whether it’s your first home or your first investment property, the expense can feel intimidating.

It may be the biggest purchase you ever make. So let’s talk break down every step you’ll take to get financing.

  • It’s important to get really clear about what kind of home you can afford before you start looking. The price range may impact the area in which you’ll buy, the type of home (ex: townhome vs. single family home) and the specific features (like number of bedrooms).

    The first question you need to answer is; will I be paying cash or utilizing a loan to purchase this house?

    If the answer is utilizing a loan, the next step for you is to get in contact with a lender so you can get pre-approved for a loan. Doing so as a first step will make the transaction much more efficient and ensure that when you do find a home, you will be able to finance it without any surprises.

    Additionally, a lender will be able to provide you with a specific price range of the homes you’ll be able to afford by reviewing the state of your finances. Read the next section below for more details.

    If you are not using a loan, you will more than likely be paying in cash. In that case, it is a little more straight forward to understand the price of a home in your price range by looking at the liquid funds you have available and allocating what you think is reasonable towards a home while considering all other upcoming expenses that you may need cash for.

  • To find a lender, ask around for referrals from your realtor, friends or family. It’s worth speaking to two or three lenders to get a feel for how they communicate. Ask a lot of questions and see how they respond and if they will patiently answer. Loans can be complex and it helps if your lender can thoroughly explain each step of financing in a way that makes sense to you.

  • Once you’ve chosen your lender, you’ll ask them to help you get pre-approved for a loan.

    Pre-approval is a process whereby the lender will review your finances, including but not limited to your income, credit score, savings, and debt, to determine how much money they can loan without too much risk.

    In other words, they want to be sure that lending money to you is a good investment where the loan will be repaid without issue.

  • Go to Start Your Search

  • After pre-approval, your lender will provide a price range for your search that you can confidently expect to receive financing for as long as your financial situation doesn’t change significantly before you buy.

    Share this price range and your pre-approval letter with your realtor.

  • In some situations, you may not be pre-approved for a loan.

    More than likely, it means you need to improve the state of your finances before you can receive a loan.

    Ask your lender why you were not pre-approved. Next, ask them for their recommendations that you can take to work towards becoming qualified.

    Some examples of this may includek paying down debt or increasing your credit score.

  • Your process will be similar but the loan products available to you may be different.

    Make sure you’re working with an investor friendly lender. Let them know the investment strategy you’ll be using for the best guidance or a referral to another lender.

    Can’t find an investor friendly lender? I can help.