Today’s post is written by guest blogger, Virginia Nolen, also known as Kevin’s assistant.
This will be news to most of Kevin’s readers, but as a little background information: my husband accepted an appointment to a new job last summer, which happens to be 1100 miles and an entire climate away from his previous one in the humid, lush South (yes, that needs to be capitalized). This meant picking up our family, putting our beloved little house on the market and moving to the high desert of Colorado’s front range. Being the sensible and wary folks that we are (in other words: low risk tolerance), we chose to rent until such time as our house back in the South sold. Well, it took 7 months but the house did sell (and we’ve closed the contract, so I can say it’s a sure thing). Now I’m itching to make another small miracle happen and buy in our new area before our rental contract is up in August. Kevin has been listening to me drone on about it and decided that I’m learning some lessons that you might benefit from. So here, in a nutshell, is my highly amateur guide: Steps to Finding (and Purchasing) a New Home.
- Spend hours on the internet looking at houses you’ll never be able to afford. Decide to call it “research” into what you’d really like.
- Spend hours on the internet looking at houses in approximately the neighborhoods you’ll want to move to, mostly looking at the ones that are out of your price range. Again, call this “research” into what the high end of the market looks like.
- Spend hours on the internet looking at houses that are more mid-range, then spend hours looking at foreclosures and short sales that are still way out of your anticipated price range, pretending to keep in mind that you need to keep your total mortgage to 2-2.5 times your annual income.
- Spend hours on the internet (are you sensing a theme here?) figuring out what a low-mid range house is in the approximate geographic area you need to live in, and figuring out what the rough price range is of a house that’s the size you want to live in for the next 15 years (bigger than a shoebox, smaller than a mansion?).
- File your previous years’ tax returns because you’ve procrastinated after having moved across state lines and the whole idea just gives you the heebie-jeebies.
- Do a lot of number crunching. Any mortgage broker is going to look at your monthly income vs. your monthly mortgage+insurance+escrow and want it at 28% or less. Run numbers comparing monthly income to total monthly debt, knowing it needs to be at 36% or less to be a sure deal.
- Go to www.annualcreditreport.com and print out all three major companies’ free credit reports for both income-garnering adults in the house because you really don’t know anymore what may or may not show up on a credit report and, like the taxes, you’ve procrastinated this yearly event because moving is expensive.
- Gasp at the gross underestimation you might have made when calculating your monthly debt + anticipated mortgage payment vs. monthly income and knowing it needs to be at 36% or less.
- Decide it’s not really as dire as it appears at first glance and promptly start looking more seriously at foreclosures in the low range of the housing market in the general geographic area you want to live in to be in at least the same county as the main wage earner’s workplace.
- Wonder if a student loan that is currently in deferment will count as monthly debt (even though you’re not making payments at this time). Call Kevin, who knows more about it than you do, have him say “Great question! Let me make a call.” He talks with a really smart mortgage broker and the short answer is: maybe. Longer answer is: yes it will count, if it’s been in deferment for less than 12 months. They’ll want some kind of proof of deferment so they don’t have to count it. If it’s been in deferment for longer than 12 months, it most likely won’t be counted and they won’t ask for proof.
- Buy a lucky charm and call a mortgage broker.