Are you in the market to buy a home—and have no idea where to start? The home buying process can be a complicated and stressful experience, but it doesn’t have to be. Partnering with the right people, who have your best interest at heart, will reduce the hassle that comes with buying a home. But there are some things you need to think about before you start browsing listings online.

Things to consider first

There's a lot that goes into the cost of buying a home—mortgage rates, down payment and fees, closing costs, and taxes and insurance—but you don't need to feel overwhelmed. We're here to simplify the first steps of starting the home buying process. First, you’ve got to figure out what you need in a home, what you can comfortably afford, and how to make sure you pick a mortgage lender that will have your back.

What you need vs. what you want

Most people aren’t going to find a house that perfectly checks every box on their wish list and also fits neatly in their budget. It’s a good idea to have a running list of what the home absolutely must have as opposed to the “nice-to-haves.” Some of those critical necessities might include the number of bathrooms and bedrooms, distance from work and/or school, yard space, and the condition of the home. Your “must-have” list will help keep you grounded and remember what’s important when you’re struggling to make a decision on a home. Don’t let certain luxuries, like cosmetics, picturesque lawns, and added amenities entice you into paying more than you have to.

How much mortgage can I afford?

Is that even the right question? "What can I afford?" is a critical question to ask, but it isn't limited to the dollar figure of your mortgage. The cost of owning a home is a lot more than the house's selling price or your monthly mortgage payments. There are quite a few one-time and ongoing costs associated with buying a house that you need to consider to get a true picture of what you can afford.

When you buy a house, you aren’t just adding a monthly mortgage payment to your budget. Make sure you are preparing for the expenses of closing on and moving into your new home. On closing day, your down payment is only part of what you’ll pay to make the house yours. The other big piece is closing costs—an assortment of fees paid to the other parties involved in sealing the deal like the title company, loan servicing company, local recording agency, etc.

After signing a few hundred pages at your closing (just kidding, it only feels like that many), the house is yours, and a few more one-time expenses are going to hit. Renovation costs could be very minimal in a move-in ready house, quite substantial in a fixer-upper, or anywhere in between. Will you need to purchase items to fill or maintain your new home? Think furniture, appliances, lawn equipment, and cleaning supplies. Expect to shell out more money on the actual move for packing supplies, vehicle rental/gas, hired help (or pizza and beer to entice friends to lend a hand), and maybe time off work.

So, you’re finally moved in, whew. Now the recurring bills will start to arrive in your mailbox. Your mortgage payment is likely the biggest, but not the only one. When figuring out how much to budget, remember that a bigger house will generate bigger utility bills. HOA fees, property taxes, and homeowner’s insurance are all new expenses you will need to account for too. And consider whether you will pay them through an escrow account attached to your mortgage or out of pocket throughout the year. Appliances fail, trees fall, things get broken … and when they do, it’s all on you to fix them. Plan and budget for unanticipated home and property maintenance to pop up.

Before meeting with a mortgage lender, itemize your monthly income and expenses to figure out what you’ve got to work with. Next, think about all the new expenses that amount will need to cover in addition to the mortgage payment. When you meet with a trusted partner, they should be able to assist you in crunching the numbers to project a realistic scenario and personalize a plan that fits your budget.

This step is key to making sure your home buying decision is a wise one. Getting preapproved without taking your real cost of living and budget into consideration could easily leave you with a monthly payment you can’t actually afford. Dedicate the time to this step that it deserves, then compare your results with your must-have and nice-to-have lists. If your budget will get you the house of your dreams, great! Just remember you don’t have to spend your max budget. If a less expensive home still checks all your required boxes, don’t look for a bigger, fancier home just because you’ve got room in the budget.

On the flip side, if you find that the homes on your list are over and above your budget, it’s time to make some choices. If you take the nice-to-have list off the table, are there homes with just the must-haves that you can afford to purchase? Is everything on your must-have list really necessary, or could you pare it down? If the numbers still aren’t adding up, it might not be the right time to buy a house. While having to wait is disappointing, it’s better than buying a house that doesn’t meet your needs, or struggling to pay your bills every month. It’s important to note that if you’re feeling pressured by anyone involved to move forward anyway, you should take a hard look at that person’s motives and what they stand to gain.

Need help? Call 1-800-641-5036 or email mortgages@GOLDcu.org to speak with one of our experts who can answer your questions and help guide you through a low stress home buying experience.

Finding the right mortgage lender

Finding the right partner for your home buying adventure is no easy task. You’ll need to sort through the hundreds and hundreds of mortgage lenders that are out there ready to take you on the rollercoaster ride that is home buying. You could start with an Internet search, but don’t overlook the banks and credit unions you already have a relationship with. Someone you trust who you’re already banking with is a good place to begin. You may still need to shop around for the best advice and eventually the best rates, but you can narrow your search from hundreds to a handful. And if you wouldn’t trust your primary bank with a mortgage, maybe you should shop around for a new financial institution while you’re at it.

Why partner with the right lender

Finding the right place to help you through the home buying process can make all the difference. It’s an important step a lot of home buyers overlook when starting their search for a new home, leaving the decision up to their realtor or the first result that pops up in Google. Teaming up with a lender that has the answers you need will help you become a savvier home buyer ready to start looking for that new home with confidence. Throughout the process, your mortgage lender should provide continued support and should be your #1 advocate from start to finish—and beyond. And that advocate should be not just a single company, but a person who sticks with you. There’s nothing more frustrating than being handed off to a new person for each step of the process, a person whose name you don’t even know. If that’s how your lender does things, they’re doing it wrong.

Common mistakes home buyers make

When buying a home, you’re faced with some big decisions that can be both scary and exciting at the same time. Don’t let either, or both, of those emotions lure you into these common home buyer missteps:

• Starting with a realtor instead of a mortgage lender with your best interest at heart
• Looking for (and falling in love with) a home before you’ve established your needs and budget
• Thinking about making an offer before meeting with a trusted mortgage lender
• Buying a home you can’t afford (even if the realtor says you can)
• Rushing through the process without understanding all that’s involved
• Miscalculating the full costs of buying a home
• Overlooking other loans that don’t require the standard 20% down payment
• Mismanaging your credit
• Exhausting your savings

Did you know that unless you've signed a buyer's agency agreement, your realtor doesn't work for you? Make sure your home buying team is really on your team. Avoid becoming a victim of home buyer's remorse and find the right mortgage lender that can help walk you through the prequalification and preapproval process as the first step to your home buying journey. Then you can start the fun part—shopping for your new home!

Want to learn more? Contact our mortgage consultants today and we’ll help you figure out where to get started.