1. MAX SALES PRICE. You need to determine your maximum sales price based on your income and current debt payments. This number will tell you how much house you can buy. This gives you a cap to use when you are online browsing homes and neighborhoods and to set realistic expectations. If your max is near the minimum sales price for an area and prices are increasing, you will likely be priced out of that area so you'll need to focus on some backup areas to move to in 2015.
2. HOA FEES. Annual association dues are not as big of a concern on single family homes as they impact you more on townhomes/condos with monthly HOA dues. Even though these fees are not a part of your mortgage payment, you lender treats them like they are and count them against your debt-to-income ratio. So you may find the right property in the sales price range you want BUT if the monthly HOA fees are too high, you will not be able to qualify even though you qualify on the mortgage alone.
3. PROPERTY TAXES. These affect single family homes more than they do condos and are more of a factor in Dekalb and Fulton County. Your annual tax bill is amortized into your mortgage payment so it can greatly increase the payment and cause you not to qualify. A good loan officer will recognize this and give you a cap on where the taxes need to be assuming you stay within the sales price range and have a decent price on hazard insurance--which is also amortized into the mortgage payment.
4.TYPE OF LOAN. Your basic loan types are FHA and Conventional loans. FHA loans require 3.5% down and Conventional 5% or more (usually 10%). FHA loans have standards that the property must pass in order to qualify for financing. Mainly, the home cannot exceed $5,000 in lender required repairs. This is crucial to know when assessing properties that need repairs in order to be occupied. With condos, you must ensure the community is FHA approved which many are not due to a multitude of reasons. Knowing if you're using an FHA loan up front will allow you to filter out homes that cannot qualify and save you time, money, and headache!
5. LOCATION. Based on the results of your pre-qualification, you will be able to determine what areas of town you can move to. Your ideal areas may be out of your price range or may not have enough inventory of homes that qualify for your financing criteria. While it is important to know where you want to move to, getting pre-qualified will determine where you can move to. If you require down payment assistance, you'll want to know what areas are eligible and/or what counties offer programs that you can qualify for.
6. TASTE FITS THE BUDGET. Once you've analyzed where you are loan wise, you can determine if your wish list matches up with your budget. In other words, if you can afford what you want. The best process of elimination is to select your top 3 areas, minimum number of bedrooms, and size/style requirements. These are items that cannot be changed. Other aesthetic items like wood floors, stainless appliances, kitchen islands, etc. are things that can be added later to make the home your own.
I have a full list of the lenders I close loans with; any of them can assist you with starting the process now so you can purchase later!
