How to begin the home buying process

Begin at the beginning

You have made the big decision to purchase a home.  Where do you go from here?  The first thing you will want to do is determine how much you can afford.  First stop should be a Bank or Mortgage broker to obtain a Pre-Approval, not a pre qualification.  What's the diff?  A pre-qualification is just a letter saying that based on your description of your financial situation you are ok to borrow a certain amount.  A pre-approval is a more concrete determination using an actual credit check and income vs: debt to determine how much the bank is ready to lend you.  Why do this?  Simple, first of all when you go to a real estate broker to look for a property, it will give a green light to the broker as to how much you can spend.  Second and more important, when you start to negotiate on a property, you can use the pre-approval as a bargaining point, and many listing brokers now will require a pre-approval before they will consider an offer.

House, Cooperative, Condominium?

Now that you have your pre-approval letter, the next step is to figure out what type of property you are looking for.  Your choice is either a house, or an apartment.  Houses are going to be more costly however they have some advantages as well as disadvantages.  Owning a home gives you a certain autonomy of ownership.  It's your castle to live in it the way you choose(with certain exceptions).  You may also enjoy the benefit from a yard, garage, and or basement. However anything that goes wrong i.e. leaks, breakdown in heat or hot water, gardening, general maintaining of the property, not to mention shoveling snow and raking leaves(although, this is why you have kids!) is all on your head.In a cooperative or condominium many of the headaches are taken care of by management.  You are usually only responsible for your own apartment, but the running of the building is not your worry.  Your maintenance/common charges takes care of the building. You are responsible for renovations if you need/want them, but that's pretty much it.  Depending on the building you will also get certain extras such as terrace, doorman, parking, gym, laundry, storage, and common rooms.Ultimately, it will depend on your personal taste needs, and wants, as well as what you can afford.

A final word about buying a Cooperative or Condominium

Many times a customer will come in with a pre-approval and tell me the bank says they can spend X dollars.  I then have to explain to them that the banks is not the final judge when it comes to buying a cooperative.  In a coop you have to pass a board of directors.   They have stricter rules as to income vs: debt ratios when it comes to owning.  They also take into account the monthly maintenance charge and sometimes they will also weigh your assets and other factors.  You will have to fill out a board package, and supply documentation such as tax returns, w-2's or 1099, net worth statements, several months of bank/investment statements and more.Condominiums for the most part are the same as buying a house, and unless they require approval, your pre-qualification will be accurate for a purchase there.

As always, if you have any questions just drop me a line and I'll try to answer any questions.

Now get out there and start looking