Buying a house is a big deal, and it is one of the significant decisions you’ll ever make. It takes a lot of effort to put yourself in the best position to purchase a home. It could take months or years, depending on your credit and savings.
Here are ten things you need to do to get ready to buy a home:
1. Get Out Of Debt
If you are planning on purchasing a home, you must work on paying your debt, especially your credit card debt.
Getting out of debt means you will not stress about your finances when you do buy. It will also help to improve your credit rating and can affect the mortgage you will qualify.
2. Your Credit Report
Checking your credit score should come before looking for houses. Mortgage lenders determine whether you’re creditworthy using this number. A higher credit score means you’ll qualify for a lower interest rate.
To boost your rating fast, pay off your debts. You may consider using a credit card on installment loans. Remember to pay them on time (missed payments can damage your score). By the time you’re ready to buy a home, your score should be where you want it to be.
3. Do Check Credit Errors
A low credit score may not be entirely your fault. Creditors make mistakes when reporting. If you notice any errors in your report (identity errors, incorrect balances, or unauthorized accounts), be sure to contact the credit bureau.
4. Save For A Down payment
Saving up for down payments help you ready yourself to buy a home. To qualify for the best mortgage rates, you’ll most likely need to make a 20% down payment. Putting down 20 percent is the most convenient way to avoid Private Mortgage Insurance (PMI) costs.
But if you cannot afford it, don’t worry – some people put down less.
5. No Major Changes In Your Life
Sometimes you can’t control what happens in your life. But if possible, do not change your job, buy a new car, buy furniture or apply for a new credit card. Lenders will take note of these changes, and they may affect your credit score. You may fail to qualify for a home loan and lose your dream home.
6. Set A Budget
Besides saving for a down payment, set aside extra money for unforeseen costs and expenses of owning a home. A budget will guide you to know how much you can afford on monthly mortgage payments.
Even though your house is an integral part of your life, there are other areas too. Remember to budget for other things like food, hobbies, insurance, taxes, and utilities.
Once you become a homeowner, you should be ready for costs, which include utility bills, repair, and maintenance costs. One of the best ways to ensure success when purchasing a home is to keep your budget realistic- don’t underestimate the monthly expenses.
7. Get Pre-Approved For Mortgage
Most people tend to ignore getting a mortgage, and they’re in a hurry to shop for properties. Different mortgage lenders offer a variety of rates and loan types. It’s important to shop for a mortgage lender with the best rate and mortgage option for you.
Once you’ve chosen the mortgage that is right for you, it’s crucial you get pre-approval. Pre-approval not only helps you to know your budget, but a seller will take your offer seriously. It’s possible to beat other offers since the pre-approval shows the amount a lender has agreed to loan you, guaranteeing the seller you’re willing and able to pay.
8. Secure A Real Estate Agent
Having a real estate agent makes the process of finding your dream house easier. You can find one through referrals from family and friends. A professional will provide you with details of real estate available in your price range.
9. Shopping For A Home
Browsing online listings is a great place to search for a home by the number of bedrooms, price, and location. Another way to narrow your options is to visit open houses. While you’re in each house, you should take photos and notes to compare them later.
Make a wish list on the non-negotiable elements (number of bedrooms, the walking distance to the bus stop or the school district), and items that would be nice to have as well as dream features (swimming pool). You may not get everything on your checklist, but you’ll get close.
10. Make Sure The New Hood Is Right For You
Check out the neighborhood- the schools, restaurants, parks, and grocery stores. One way to know the hood is to talk to the neighbors. Think about the things you love to do and make sure the area is conducive to do them. Visit the new neighborhood both day and night to see what it is really like.
Once you’ve prepared yourself (built your credit score, saved enough for a down payment, creating a budget, secured a mortgage), you’ll see it was completely worthwhile. You’ll have a great house you can afford and a place to call your own.