Buying A Home (real estate, mortgage broker, credit)

[Bill Hitchcock]

Buying A Home

The key to a successful home purchase is in the dictionary!

By: Bill Hitchcock

This article is for the folks who want to buy a home. And I am relying on my 1966 Funk & Wagnalls Dictionary and my 1966 Random House Dictionary to explain the keys to a successful home purchase. Not a house purchase. Not an investment property purchase. A home purchase.This article is for the folks who want something that they are going to live in and enjoy. For these folks “investment” is about their future in a home and the memories made in it.

Forget investment-Think affordability

My 1966 Funk & Wagnalls Standard College Dictionary defines “Investment” as, “The investing of money and capital to gain interest or income”

You are buying a home not a business. Why worry about “capital” or “gains”? The most important aspect of the home purchase is you and your family and that will never get factored in to any pecuniary bottom line. The traditional definition of “investment” simply does not apply when comes to purchasing your home.

But in regards to money, the only thing you do need to pay close attention to is if you can afford the home. “Afford” according to Funk & Wagnall is, “To have sufficient means for; to be able to meet the expense of.

Can you afford all of the costs associated with closing on this home? Can you afford the monthly payments?

The whole idea is to transition you out of your current living situation and into your new home with no financial hardships for today or for tomorrow. You must remain financially “viable” before, during and after the purchase. “Viable”, according to my 1966 Random House Dictionary is defined as, “1) capable of living 2) physically fitted to live.”

You must have sufficient means (afford) for a down payment and capable of living or able to handle (viable) the monthly mortgage payment.

Cart In Front of the Horse

Have you been putting the cart in front of the horse? You have been if you haven’t determined your financial status and capabilities in advance of your property search. Here is why.

Knowing your limits and capabilities will help streamline the home search. After all, there’s no sense in looking at a house you can’t afford. And knowing your limits can sometimes be a wake-up call too. Sometimes you discover that what you need in a home and what you can afford do not match. But that’s OK. It can take years to become financially able to buy what you need in a home. But it only takes a few short months to lose a home you can’t afford.

Visit a Mortgage Broker before you visit a Real Estate Broker and get pre-approved for a loan. This is also the time to find out if there are any “situations” with your credit. Not only does your credit history determine if you can get a loan, but it will also determine what type of loan you can get and at what percentage rate.

Here is another benefit (and it’s a big benefit) in determining what you can afford in advance and getting pre-approved for a loan. It gives you negotiating strength because you the buyer become the same as a cash to the seller.

Think about it-If the seller knows that funds are there for the purchase then it becomes a simple matter of satisfying your terms and conditions to bring the transaction to a successful close!

Having access to funds is power. It allows you to control the situation. The more of a risk you are to the seller, the less likely they are to respond to your wishes.

Another benefit of taking care of the financials in advance is eliminating emotional & irrational decisions. Imagine finding your dream home and then finding out that you can’t afford it. Or even worse, allowing emotions to overrule you and taking a loan you can’t afford. Irrational: “Contrary to reason; absurd; senseless”. Allowing emotions to rule in any financial decision is just that.

I hope you enjoyed what my Funk & Wagnalls and Random House Dictionaries were able to bring to home buying. People often ask me why both of my dictionaries are from 1966. I tell them it’s because I don’t like any words that were created after that year. It’s not true of course, but does tend to get people thinking. The reality of it all is that I buy used books and it just so happened that both were published in 1966.

[seashellbelle]

Originally Posted by Bill Hitchcock

Buying A Home

The key to a successful home purchase is in the dictionary!

By: Bill Hitchcock

This article is for the folks who want to buy a home. And I am relying on my 1966 Funk & Wagnalls Dictionary and my 1966 Random House Dictionary to explain the keys to a successful home purchase. Not a house purchase. Not an investment property purchase. A home purchase.This article is for the folks who want something that they are going to live in and enjoy. For these folks “investment” is about their future in a home and the memories made in it.

Forget investment-Think affordability

My 1966 Funk & Wagnalls Standard College Dictionary defines “Investment” as, “The investing of money and capital to gain interest or income”

You are buying a home not a business. Why worry about “capital” or “gains”? The most important aspect of the home purchase is you and your family and that will never get factored in to any pecuniary bottom line. The traditional definition of “investment” simply does not apply when comes to purchasing your home.

But in regards to money, the only thing you do need to pay close attention to is if you can afford the home. “Afford” according to Funk & Wagnall is, “To have sufficient means for; to be able to meet the expense of.

Can you afford all of the costs associated with closing on this home? Can you afford the monthly payments?

The whole idea is to transition you out of your current living situation and into your new home with no financial hardships for today or for tomorrow. You must remain financially “viable” before, during and after the purchase. “Viable”, according to my 1966 Random House Dictionary is defined as, “1) capable of living 2) physically fitted to live.”

You must have sufficient means (afford) for a down payment and capable of living or able to handle (viable) the monthly mortgage payment.

Cart In Front of the Horse

Have you been putting the cart in front of the horse? You have been if you haven’t determined your financial status and capabilities in advance of your property search. Here is why.

Knowing your limits and capabilities will help streamline the home search. After all, there’s no sense in looking at a house you can’t afford. And knowing your limits can sometimes be a wake-up call too. Sometimes you discover that what you need in a home and what you can afford do not match. But that’s OK. It can take years to become financially able to buy what you need in a home. But it only takes a few short months to lose a home you can’t afford.

Visit a Mortgage Broker before you visit a Real Estate Broker and get pre-approved for a loan. This is also the time to find out if there are any “situations” with your credit. Not only does your credit history determine if you can get a loan, but it will also determine what type of loan you can get and at what percentage rate.

Here is another benefit (and it’s a big benefit) in determining what you can afford in advance and getting pre-approved for a loan. It gives you negotiating strength because you the buyer become the same as a cash to the seller.

Think about it-If the seller knows that funds are there for the purchase then it becomes a simple matter of satisfying your terms and conditions to bring the transaction to a successful close!

Having access to funds is power. It allows you to control the situation. The more of a risk you are to the seller, the less likely they are to respond to your wishes.

Another benefit of taking care of the financials in advance is eliminating emotional & irrational decisions. Imagine finding your dream home and then finding out that you can’t afford it. Or even worse, allowing emotions to overrule you and taking a loan you can’t afford. Irrational: “Contrary to reason; absurd; senseless”. Allowing emotions to rule in any financial decision is just that.

I hope you enjoyed what my Funk & Wagnalls and Random House Dictionaries were able to bring to home buying. People often ask me why both of my dictionaries are from 1966. I tell them it’s because I don’t like any words that were created after that year. It’s not true of course, but does tend to get people thinking. The reality of it all is that I buy used books and it just so happened that both were published in 1966.

Bill, as a Realtor myself, I couldn't have said it better. Unless my buyers are pre-qualified, I don't put them in my car anymore, the days of Tour Guide are over. No one can afford the extravagance of time and money these days, Buyers, Sellers or Realtors. Thank you so much for posting this.
Good news, the Fed may just drop interest rates to 4.5%. What better incentive to move forward and purchase!

[le roi]

Originally Posted by seashellbelle

Good news, the Fed may just drop interest rates to 4.5%. What better incentive to move forward and purchase!

Just personally, when I see that the "flippers" have finally capitulated, I will feel much more confident about purchasing. Surely there's a reason for all these empty, investor-owned homes in my area. Perhaps they are not priced according to demand?


Not to say that I'm waiting for that, exactly. I just see all these white elephants.