Profitt Report: Here's where to start if you're thinking about buying a house

Photo credit: MGN

Buying or selling your home can be stressful. Tour first step as a buyer is to figure out how much house you can afford. We are looking at a seller’s market, meaning there’s more demand for houses than inventory. Buyers, you need to do a little extra homework to make sure you’re getting the best price possible.

The University of Michigan finds about 40 percent of local governments say they have too few single-family houses and about 50 percent report too little multi-family housing.

One way to get a competitive edge as a buyer is to do the financial leg work before you even log online to shop for houses.

“Then at least you know and you're not going out shopping for a house that you… can’t afford,” said Nikole Reece with the Dow Chemical Employees’ Credit Union. She said getting pre-qualified for a loan also gives real estate agents and sellers peace of mind, knowing you are serious about the house.

“We can get you a letter saying you’re pre-qualified for this specific loan amount, loan type, then you can take that and take it shopping,” she said.

If you find a home you like and want to place an offer, it’s a faster transition into a mortgage application, which could make all the difference in a market favoring sellers.

The bank or credit union will need your data to do this, such as your pay stubs and credit report. The pre-qualification is only valid for a certain amount of time, depending on who you’re working with.

You’ll also want to look at the big picture, not just the immediate costs. Can this new payment work into your total budget?

“You don't want your debt payments, required monthly debt payments, to be more than 43 percent of your gross monthly income,” Reece said.

Don’t forget to include property taxes and home insurance into your calculations. You could call an insurance agent for estimates in the area where you’re shopping and check the property appraiser’s website for tax information.

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