The birds are singing, the days are longer, and we’re seeing positive signals that the real estate market may be warming up alongside the weather .

Buying a home is an exciting milestone, but it's also a significant financial undertaking. Today’s market can make even a seasoned homebuyer feel like a first-timer. Whether you’re purchasing your first home or you’ve been through the homebuying process before, knowing the steps—from financing to finding the right place—is the key to a smooth and successful experience.


Preparation: What to do when you’re thinking about buying a house

1. Understand what you can afford. Start tracking your spending using bank statements or budgeting tools to get a realistic picture of your monthly expenses. Factor in all costs, including potential homeownership expenses like property taxes, insurance, maintenance, utilities, and HOA fees.

  • Tip: Use our online mortgage calculators to help determine your budget, explore loan options, figure out monthly payments and more. 
  • Tip: Get prequalified with a mortgage broker or lender. They’ll review your income, debts, and assets to give you an idea of how much you might be able to borrow without a hard ping on your credit score. Keep in mind, most lenders won’t accept prequalifications from other lenders when discussing rates and terms. 

2. Choose a mortgage term that fits your lifestyle. Determine if a longer term is better for your financial situation. Longer term loans typically have lower monthly payments. However, you should also consider the interest rate of the loan because the longer it takes for you to pay down your loan, the more interest you are paying and therefore your total cost is higher in the end. Shorter term loans typically have higher monthly payments but allow you to pay off your loan quicker. It all goes back to your budget and what you can afford to pay on a monthly basis. 

3. Get your credit in shape. Your credit score and debt-to-income ratio (DTI) significantly impact your mortgage options and interest rate. Lenders typically look for credit scores of 620 or higher.   Your DTI is your total monthly debt payments divided by your gross monthly income. Lenders like DTIs to be roughly 36%-43%.

  • Tip: You’re entitled to free copies of your credit reports from the major bureaus (Equifax, Experian, TransUnion) every year. Review them and dispute inaccuracies immediately. Improve your score by paying all bills on time and paying off all debts and balances.
  • Tip: Do not open any new accounts until you’ve secured a mortgage. 

4. Make a timeline and start saving for a down payment. If you put less than 20% down, you’ll probably have to pay Private Mortgage Insurance (PMI). Remember that upfront closing costs for things like loan origination, appraisal, title insurance, etc., typically range up from 2% to 6%. Unlike other lenders, MFS only charges one upfront fee: the appraisal fee.  

  • Tip: Give yourself a runway to afford as large a down payment as possible, plus a “rainy-day” fund to cover for several months of mortgage payments.

 

Financing: What to do before you start looking

1. Create a budget: factoring in closing, maintenance, repair, and renovation costs plus your rainy-day fund based on all the work you did above. 

2. Shop for lenders: Interest rates, fees, and loan programs vary. Compare offers from multiple lenders to find the best deal. 

  • Tip: MFS Mortgage Services provides a range of solutions and a team of honest, local experts who know the greater New York area and can guide you through this entire process. 

3. Get preapproved: This is a step further than prequalification. Your lender will review detailed documentation like pay stubs, W-2s or 1099s, tax returns, and bank statements. They’ll also do a full credit check to look at your income, savings, and debts, and figure out how much they can lend you, at what rate, and with what conditions.   

  • Tip: A preapproval letter strengthens your offer in a competitive market, signaling to sellers and agents that your financing is secure. It also gives you a firm price range so you can keep your search realistic.

 

Shopping: Ways to gain an edge

1. Prioritize your needs and wants. Develop must-haves vs. nice-to-haves and think long-term: Can the home accommodate your future needs? 

2. Talk to people. Friends, family members, coworkers—many of them have gone through the homebuying process and can provide helpful insights and professional recommendations. Plus, you might come across someone who knows someone who wants to sell—giving you a head start on an offer. 

3. Find a good realtor. They provide market expertise, help you navigate the search and offer process, and connect you with other professionals. Ask about their experience in your desired area and price range and how they'll support you. Ensure they’re a pro by checking their licensing and reviews. 

 

Offer and closing: What to expect 

1. Make a competitive offer. Create an offer that includes the price, financing terms, desired closing date, and any contingencies. Be ready to negotiate any of the above.

2. Lock in your mortgage rate. This means that your lender guarantees that the interest rate stays the same for a certain period of time, even if the rates go up. Most buyers lock their rate after their offer has been accepted by the seller and they have formally applied for the mortgage. 

3. Schedule a home Inspection: Hire a home inspector and walk along with them as they examine the property's structure, foundation, electrical, plumbing, HVAC systems, and look for signs of pests or water damage. 

  • Tip: If problems arise, you can usually renegotiate for repairs and credits or withdraw your offer. 

4. Get an appraisal and homeowner’s insurance. Your lender will order an appraisal to confirm the home's value aligns to the loan amount, but you’ll be responsible for buying a homeowner’s policy that meets their requirements. 

5.  Be patient during the closing process: Closing can take weeks. You’ll provide final documentation for underwriting, and a title company will research the property’s title and issue title insurance. Expect to do a final walk-through to ensure everything in the agreed-upon condition. 

6. Sign the paperwork on closing day: You'll meet with your agent, the seller's agent, and a closing agent or attorney to sign documents like the Closing Disclosure, mortgage note, and deed. You’ll also pay your remaining down payment and closing costs via a cashier's check or wire transfer. Once everything is signed and funds are transferred, you’re officially the new owner. 

  • Tip: Make sure to review any documents you’re signing at least three days ahead of your closing date.

 

Feeling at home with homebuying 

Being ready to act on a homebuying opportunity is your best tip. Taking the time to understand your finances, get preapproved, and find the right partners will go a long way in ensuring you’re prepared. Buying a home is a journey, but with the right planning and guidance, you can confidently jump on the perfect place to call home without sacrificing our financial well-being.

For more insight on your situation, call us at (718) 651-7888 or email us at applications@maspethfederal.com and ask about how our Mortgage Services can help you make your dreams of homebuying a reality.