A dream home to grow into

Now that you’ve learned about low interest rates and taken dozens of virtual tours of new homes, you may be wondering what are the most important steps in making the biggest decision of your life. We’ve got a few suggestions when it comes to a new-home purchase.

Think permanence

Besides the fact that many people have unwillingly adjusted to stay-at-home lifestyles, low interest rates remain a primary incentive for purchasing a new home. For many, the cramped quarters of everyoneat-home living, combined with the suggestion that interest rates may go even lower this year, means they can finally stop renting.

With new construction, renters not only can begin building equity, but they can do so in a home whose builder already put a great deal of thought into the ways that households need to function nowadays.

Hopefully, by the time you start touring new homes, you’ve decided that this next step in your life is going to be at least semipermanent. If so, then you know how important it is to visualize yourself in the new home for at least five years; 10 or more would be better.

During that time, in a reasonably healthy market,

you’ll not only be able to build up more equity than you would over a year or two’s time, but you’ll be able to put your own stamp on the property.

By adopting a mindset of permanence, you’ll make better decisions during the shopping, building and designing steps.

Get a mortgage preapproval letter

It’s always better to start shopping for a new home

with a preapproval letter in hand if you’ll need to take out a mortgage for the purchase.

The difference between preapproval and prequalification: Prequalification is the first step to preapproval. While prequalification is an indication of creditworthiness or the buyer’s ability to obtain a mortgage, preapproval goes into much more detail.

In a competitive scenario, the buyer who is preapproved to borrow a certain dollar amount is a much stronger candidate than the buyer who only has had basic prequalification.

Preapproval means that a lender has looked at the borrower’s complete financial history, including current income, assets, debts and gaps in employment that may not be readily apparent during the basic prequalification step.

Preapproval puts you in a strong position to purchase and decide on what features or upgrades you want to include before you move in.

Borrow less than you are approved to use

A common instinct is to get excited about the amount a lender says you’re approved to borrow. These days, low mortgage interest rates can increase that total dollar amount to a point you might not have imagined.

But talk to your lender about different ways to lock in a long-term, fixedrate mortgage that won’t leave you feeling “house poor.”

Start by looking at the preapproval number. When a lender approves you for a mortgage at a fixed interest rate for 30 years, for example, that dollar amount is the most they believe that you can safely borrow.

It’s the absolute amount, including down payment, taxes, insurance and any fees, that you can afford, according to the lender.

Borrowing less than you’re approved to borrow means that your monthly payments will be lower. Lower monthly payments, combined with the equity you’ll gain on your home in this strong market is, quite literally, money in the bank.

After factoring into the loan amount any upgrades you chose from your builder, if you save some spending power for things that aren’t generally included with a new-home purchase, you will be able to add or enhance:

Backyard landscaping: This can include both softscape (plant life) and hardscape such as custom stone or concrete work, a built-in barbecue, covered patio structures, a fire pit, outdoor furniture, outdoor lighting and/or sound systems, and more.

Furniture and area rugs: You want your new house to look and feel fresh, especially the areas where you spend the most time — the family room or great room, the home offices and the bedrooms.

Window treatments: Many new homes will include basic blinds or shades, but think of all the texture, beauty, brightness and privacy that you can add to your new home by incorporating higher-quality blinds, shades or shutters.

Living: One day, travel, dining out, entertaining and enjoying entertainment will again become part of people’s normal routines. Give yourself flexibility to enjoy life.

Planning for the newhome purchase process with an eye on the next several years can help you build your dreams into reality.