Buying a home takes a lot of preparation and planning. It is important to get your finances in order and other tasks done before you ever start house hunting!
Keep in mind that this early stage of the buying process doesn’t happen overnight. It takes time on your part even before we start working together.
That way when you are ready to make your move, you confidently move forward to make that new home you just saw YOURS.
The only way that can happen smoothly is if you do your homework first, so start prepping and planning now if you want to buy a home in the months ahead or even a year from now.
My list below will help you stay on task. You’ll be ready to buy in no time:
Do Your Homework
It’s very important to become educated about buying a home, especially if you’re a first-time buyer. You want to truly understand what it takes to buy and own a home before you even start seriously looking.
Here are some key activities you should do now:
Learn about mortgage options. Do you understand how mortgage rates work, such as fixed rates or adjustable rate loans? Or the difference between a FHA loan and a conventional loan? Learn what’s available now and even the outlook for rates in the coming year so you aren’t overwhelmed or surprised later on. This way you can determine what type of financing will be best for you. I can discuss the different types of programs with you in detail to determine which one(s) may be suitable for your situation.
Find out about assistance programs for buyers. Did you know that there are government assistance programs that can make buying a home much more affordable? You should investigate what is available for mid-income buyers, first-time buyers, veterans etc. Programs from local housing authorities can help with down payment or low interest loans; and many buyers can qualify for this assistance.
Don’t disqualify yourself before you try. I can go over with you what’s available in our area. That way, you’ll have more confidence that you can become a homeowner.
Accept you have a learning curve to face. Most homeowners have been in your shoes before, so don’t be embarrassed if you don’t know everything. No matter what, don’t be afraid to ask questions. Meet with a Realtor® (preferably me!) or a mortgage broker for an information gathering session. Or attend a home-buying seminar to get more acquainted with the process. Check out real estate sites or columnists or articles in the media.
Get Your Finances In Order
Buying a home is probably THE biggest expense you will ever have in your life. You want to be a responsible buyer and homeowner, so now is the time to focus on your finances. Don’t do anything that could disrupt your good credit!
Strengthen your credit score and build credit history. Your FICO credit score is your gateway to a good mortgage since lenders use it to determine your risk as a borrower. So, the higher your score, the better your loan options. And, if you’re a couple, then BOTH of you will need to check your credit!
It can take 6 months or more to improve your score, so if you think yours needs work, start today. Pay your bills on time, don’t take on any large debt, and double check your score for inaccuracies.
Know what monthly mortgage payment you can afford What a lender says you CAN afford can be very different in what you are willing to spend each month. No one wants to be stretched too much and become “house poor.”
Work backward from your desired monthly payment to calculate the price range you can afford.
Save for a down payment. Cut expenses and save, save, save (maybe find a high-yield savings account) right now! No matter if you get a 3% down loan or a conventional 20% down loan, lenders still want to see if you have enough cash reserves in the bank.
Remember, the cost of owning a home is not only its purchase price, but it includes other costs such as taxes, insurance, maintenance, and possible HOA fees. With a larger savings account, a lender knows you’re financially responsible and less of a risk.
During this time, you can experiment and see how you handle living with your “affordable” monthly mortgage payment. Can you handle it?
Revisit your lease agreement. If you’re a renter, look at your lease to see when it comes up for renewal. Find out if you’ll be hit with any penalties if you terminate it early. Maybe you can time buying a home so that it comes close to that date. Or give yourself a goal and use that date as an inspiration (or deadline) to get things in order so you can buy a home then.
Stay Focused with These 10 Commandments
You need to avoid some risky actions that could derail your ability to get a mortgage loan. Ignoring just ONE of these items can ruin your chances for qualifying for the loan you want.
1. Thou shalt not change jobs, become self-employed or quit your job.
2. Thou shalt not buy a car, truck or van (or you may be living in it)!
3. Thou shalt not use charge cards excessively or let your accounts fall behind.
4. Thou shalt not spend money you have set aside for closing.
5. Thou shalt not omit debts or liabilities from your loan application.
6. Thou shalt not buy furniture.
7. Thou shalt not originate any inquiries into your credit.
8. Thou shalt not make large deposits without first checking with your loan officer.
9. Thou shalt not change bank accounts.
10. Thou shalt not co-sign a loan for anyone
As you can see, start planning now if you want to buy a home in the coming months. You’ll be a more informed buyer and borrower, and will be ready to purchase a new home with confidence and less stress!
And, know that I can help cut the learning curve for you. We can schedule a time to meet and I can walk you through the process and steps involved well before you are ready to move so you know exactly what you need to do when to be ready to move, whenever that is for you.
I believe that with Information, Preparation, and Strategy, you can achieve great success. Let me show you how!
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