Buying a house can be an exciting time. While it’s one of life’s more important decisions, it can be accomplished simply with some basic preparation. To ready yourself for the homebuying experience, we’ve compiled the following list of 11 things to do before buying a house.
Check Your Credit
A quick review of your credit history will reveal if your credit is in good shape. In addition, it can show any errors or discrepancies that should be reported to the credit bureaus as soon as possible.
Pay Down on Debts
While you certainly don’t have to be debt free to buy a home, lenders will look at your debt-to-income (DTI) ratio (the percentage of your gross monthly income that goes toward your monthly debt payments), so it’s important to limit your debt or increase your income or both.
Get a Pre-Approval Letter
Knowing what properties you can afford is as simple as getting a pre-approval letter from your potential lender. By submitting the necessary income documentation, the lender may provide you with a written statement that states your qualifications for a loan up to a certain amount at a specific interest rate.
Know Your Costs
Knowledge is power, so knowing your costs ahead of time can go a long way in your financial planning, and using a mortgage calculator can be helpful in planning your budget. In addition to your down payment, it’s good to be aware of one-time fees such as closing costs, moving costs, appraiser and home inspection fees, along with recurring fees such as property taxes, mortgage insurance and homeowner’s insurance.
Make a Budget and Stick with It
Making a budget has its benefits. Once you see how your money is spent, you will have a clearer idea about how to make your household dollars go further. All it takes is a little discipline, some smart buying habits and living within your means.
Find the Right Real Estate Agent
What makes a good Real Estate Agent? For some, it’s experience or professionalism. For others, it may be trustworthiness, responsiveness, being a local expert or empathetic to the buyer’s concerns. Whatever characteristics you value most, it’s important to find a Real Estate Agent who embodies these ideals to meet your homebuying needs.
Understanding Wants vs. Needs
Identify early on what home features appeal to you and classify these as wants (nice, but not necessary) and needs (must-haves). Look to fulfill as many needs as possible, while being flexible on the wants. This will help you focus on your priorities and to rule out certain homes that don’t meet your primary criteria and to rule in others that do.
Scope Out the Neighborhood
Once you find a potential home for purchase, do some elementary fact-finding about the neighborhood. For instance, how is the school district? How long would your commute to work be? What is the crime rate? Are there any parks nearby? Are the other homes on the block well maintained? Have the neighborhood homes dropped or appreciated in value?
Is Everything Up to Code?
Building codes help ensure public health and safety, as well as certain environmental protections. Before you close on your new home, it’s wise to hire a reliable home inspector to help determine if existing work has been done properly or needs to be done, as well as point out any potential hazards, such as water damage, mold, asbestos or radon.
Picture Yourself in the Home
Envisioning yourself in the home can help you decide if it’s right for you. With just a little imagination, you can think beyond the current owner’s decorative choices and evaluate if the home meets your needs and lifestyle. By focusing on what’s possible, you can overlook things that can be easily changed with some basic home improvements such as a coat of paint, new flooring or some DIY landscaping.
Contact New American Funding
When you’ve finished your preparation, you can begin your homebuying journey by giving New American Funding a call. We can help answer your questions and discuss a loan type that is right for you and your financial future.