Buying a Home in Oregon: Financial Readiness

Get Ready Financially

I’m breaking down the Oregon Home Buying process into 8 Steps. Buying a home is a big decision, and the best thing you can do is to feel prepared and have a support team you trust.

This is a fast paced market, and in order to be competitive you need to be able financially prepared. What does that mean, exactly? You need to be pre-approved with a local lender.

Where do I find a great lender?

Your agent can recommend a lender for you. They have experience working with lenders on past transactions, and can connect you with someone who will meet your needs. You can also get recommendations from trusted friends and family. You want to work with someone who does a thorough vet of your financials, is experienced, and respected in the Portland real estate community.

What is the pre-approval process?

Your lender will ask for financial documentation - bank statements, tax returns, proof of income, etc. They will also run your credit. In most cases this is a pretty simple process. If you are a small business owner or freelancer it can mean gathering a few more documents. Once they have your financial information they can usually get you a pre-approval in a few days.

If a lender tells you that you aren’t quite ready financially to buy a home they can give you a roadmap and suggestions to get there. So even if you don’t think you could get pre-approved it still may be worthwhile going through the process.

How can I develop a budget?

Your lender will give you a max monthly payment based on the financial information you provide, and will tell you what that monthly payment allows you to borrow. The amount you can borrow + your down payment + closing costs + money set aside for homeownership expenses = how much house you can afford.

For example, if you are hoping to buy a $500,000 house, and the lender approves you to borrow $400,000, you need to have $100,000 for a down payment, and I would recommend around $15,000 - $20,000 for closing costs and homeownership expenses.

That was a lot of information, and this is just an overview. Your lender will go into much more detail about the various costs associated with your loan, and with buying a house.