Before start hunting for your dream home, you need to make sure you’re prepared for the process. Read on to learn five things you should do before you start visiting open houses and scheduling showings.
- Make sure your finances are in order:
There are a number of specifics mortgage brokers look for with new applicants, and neglecting to consider these before you apply for a loan can be detrimental to you. Here are a few things you should do before you put in your application:
- Do a free credit check. If your score negatively impacts your loan prospects, work to improve it.
- Lenders want to see consistency in your employment. If you have gaps, be prepared to explain.
- Make a list of all employers and addresses from the past ten years – include dates.
- Collect your tax returns and payment stubs and store them in a secure, easy-to-share folder.
- Resolve financial detriments that could affect your eligibility for a mortgage, like delinquent debts.
Taking the time to proactively collect necessary documents, check your credit, and so on will simplify the loan application and approval process.
Figure out what buying a home will really cost and start saving:
Buying a home is a major financial commitment. Before you take the leap, it’s good to make sure you know exactly how much house you can afford. But there’s more to think about than your monthly mortgage payment. You have to consider the cost of interest over the lifetime of your loan, HOA fees, costs of maintaining your home, and utility bills,
If you’re taking out a traditional mortgage or are using an FHA loan to finance your home purchase, you’ll also be required to put a certain amount of money down. Make sure you understand what your down payment obligations are well in advance so you can save up the necessary cash. You also need to have money available to cover closing costs, legal fees, home inspections and moving expenses.
Make sure your expectations are realistic:
Many people use the phrase “dream home” for a reason. If you dream of an amenity-studded condo in the heart of your favorite city, you may find that you can only afford it if it’s 300 square feet. Or you envisioned a house near the woods; you may find that it also happens to be near a noisy overpass. It’s easy to dream, but you should mentally prepare yourself for what you can realistically afford before you start touring homes. That way, you’ll be able to make a sound decision that’s a good fit with your wants, needs, and budget.
Write down must-have’s versus nice-to-haves:
Decide what you want in a home, and make a list that differentiates your must-haves from your nice-to-haves are. Think about location, features, amenities. Is the commute ideal? What about features you’re looking for in a home, such as central AC? Doing this exercise will help you better evaluate homes so you can narrow down your list and spend less time house-hunting.
Be ready to make compromises when necessary:
If you have a firm budget and list of features that you will not bend on, expect it to take a good amount of time to find the perfect place. Also, if you find yourself in a situation where you can’t find all the things you want for the budget you can afford, be prepared to make some compromises. It’s not ideal, but most buyers ultimately have to give up one or two of their must-haves in exchange for a comfortable monthly payment.
Home buying is an exciting journey, but one you must be both financially and mentally prepared for. Follow the steps outlined above to prepare for, simplify and streamline the process.
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