The most important step to buying a home is to consider what you can afford. Take an honest and clear decision on what to buy. Everyone deserves the biggest and the best; only a few can afford to buy their dreams. And if you want to prevent frustration and dissatisfaction in the process later on, now is the time to grasp the truth of your buying power.
You'll need to start with a bank or mortgage broker if you don't want to buy with all the cash. It is very painless to get going. You have two goals in mind: get an impartial view of your buying power, and get a letter of loan pre-approval. The loan officer will request payroll stubs, tax reports, and a good description of your assets and liabilities. Give real numbers to them, and cover nothing. You want a real overview of what you can borrow and pay comfortably in the years to come before advertising your property on sites like for sale or rent by owner.
Any worthy lender will be able to generate a letter of prior approval within 24 hours. It is created using a structured computer program called Desktop Underwriting (or DU), and it is your key to understanding what you might possibly buy. Notice that theoretically, I said. This letter is a preliminary document which tells you what a standard bank thinks an average person can afford with your financials. It does not take into account the condition of the house, the condo/homeowner association, and other factors that will eventually have to be reviewed and accepted by the underwriting team of the lender later in the process of buying the home.
Now, armed with a letter of pre-approval specifying a particular dollar sum you can afford, you're ready to start the dreaming phase of your buy. Start with a piece of blank paper and think about the most important things for you in a potential home. Most people are going to want to start thinking about how many bedrooms and toilets they want. I urge you to start with where you want to live. Nothing is more important than location. When you have a target location and test home asking for rates, you'll see easily if you've got enough money to buy a home there. If not, maybe change your dream. Reevaluate your position and features before you set an achievable target.
Purchases of immovable property on sites like for sale or rent by owner review can be made easy if you methodically approach it and view it as a business decision. Know, this is potentially the biggest investment of your lifetime. Get serious, but just have fun. Most notably, make no self-imposed setbacks.