Last week I shared the very personal (and emotional) story about putting our first offer on a house (and the inevitable heartbreak that came with it). So many wonderful people reached out and shared their house-hunting-war stories with me and I can’t thank those kind souls enough, but then a few friends were like, “what the hell, how did you even put an offer on a house?”
I realized there are a few key steps we took between seeing our first starter home and putting an offer on a house that I have yet to share, so here we go. Here are the 3 very important steps I believe one should take before even walking into your first open house:
1. Get pre-approved for a mortgage – This step is excruciating and boring, but just do it, because if the right house does come along and you are not pre-approved, you will miss your chance. Meet with a bank or a mortgage broker. We really dragged our heels on this so it felt like it took forever, but really it just took us getting some letters of employment and tax notice of assessments and then BAM, we were told how big of a loan we can get and now know our realistic budget.
2. “Practice” paying your mortgage – The bank will allow you to spend 40% of your combined income on debt (which includes mortgage, car payments, student loan, etc). But just because the bank is comfortable with that amount, doesn’t mean YOU are. We found out we were approved for monthly mortgage payments that are FAR higher than what we currently pay for rent, so even if the bank is cool with giving us that loan, we are not. To help this issue our mortgage broker suggested we “practice” paying our mortgage to see what life would be like. So now we put away double what we’ve been paying for rent, and see what kind of sacrifices we have to make in the drinking, going out to dinner, and travel departments. It’s been surprisingly helpful, and means for now we are putting more money into savings.
3. Make a needs vs. wants list – Sit down and make a list that has a column for deal breakers, and a column for things that you would like but can live without. Things like number of bedrooms, location, patio, etc. For us I found the only deal breakers were that it be at least 2 bedrooms, have in-suite laundry and not be on a major street. This list will be invaluable to your real estate agent, but also for your own sanity. The more you know what you want, the smoother the process will be.
Once you’ve done these 3 steps, happy house hunting and best of luck with the emotional shit storm that is to follow!