It's perfect, where do we sign?

Well, first you need to take a really, really deep breath and think for just a minute.  I am maybe a little more cautious with my buyers than many of my colleagues, but here's the thing - this is the biggest purchase of your life.  It's a huge committment; not quite as big as entering into a lifelong partnership with your true love but still, the money and time you are going to invest in your home is not to be entered lightly.

What, to you, constitutes the "perfect" home?  Is it brand spanking new?  Do you get to have fun ripping down walls and refurbishing woodwork?  Is it something in between, something that you can repaint and refloor, or even just move into and change one room at a time? 

How about the style?  Do you love or hate split levels?  Are you concerned about having too many stairs and prefer a ranch or do you like the idea of all the bedrooms being on the second level and away from the living spaces? 

Do you need a big yard or hate mowing?  Do you want a condo - where you never have to do "outside" work, or do you love to garden? 

How many stalls do you need the garage to be versus how many would you want? 

Before you even start seriously looking, make yourself a list of everything you loved about the house you grew up in.  Make a list of everything you love about where you currently live, and make another list of things you absolutely do not want in your new home.  Keep this set of lists and discuss them with your Realtor.

Go to your bank, and pick another one that somebody you know, like and trust recommends and interview a couple of lenders - it's important that you like and trust the person handling the financial aspects of your purchase. Make sure you ask about such things as points, prepayment options, downpayment requrements and most importantly how much you actually qualify for.

Then go home again and make a list of all your monthly bills (excluding current rent/house payment).  There are several good, free online budget forms you could use to help yourself with this and do NOT under any circumstances leave anything, including the cost of your morning coffee, off the list.  Whatever amount you have left reduce by 25% and that should be your maximum comfortable house payment.  This should be less than what the bank qualifies you for, and your very clever Realtor will be able to help you figure out the price range you can actually purchase. 

The reason you want to reduce that final amount is quite simple - you need to put money into your savings!  You need to do it so when the dishwasher spews dirty water all over your hardwood kitchen floor you can repair it and replace the dishwasher, or if the furnace conks out in the middle of the night you can pay for an emergency repair or replacement.   You, as the homeowner, carry the entire repair bill so make sure you are well covered!  You need to do it so you can order pizza on friday night and not worry about whether you have enough to pay for it, or take a weekend trip with a friend without fretting over the cost of gas. 

And you need to do all of this and more before you look at houses, so when you find the one that makes you take that deep breath, feels as comfortable as your favorite pair of jeans, causes you to think of all the great memories you will have in that one, perfect house you can turn to your Realtor and utter the words, "It's perfect!  Where do I sign?" and know that you can absolutely, positively purchase your new home.