So, you are ready to purchase your first real home, an exciting prospect as it is one of the biggest investments you will ever make. However, preparation is key to not only successfully finding the perfect home, but also to finding the right mortgage and looking like a credible buyer to sellers. Below are steps you should take prior to diving into the real estate market and looking for your new home.
Checking Your Credit Score
You should check your credit score and try to improve it, if necessary. If your credit score has any incorrect information, you should work to correct it, improve your score, and settle discharged debts. Remember, the better your score, the more money you are likely to save when paying off your mortgage.
Saving For Your Down Payment
It’s crucial to save for a down payment, which can range to as much as 20% of the purchase price, as well as closing costs. Naturally, the price of the house you’re seeking to buy will determine the amount of money you will have to save. But, for the down payment, you must have the cash or certified check on hand at the closing. Closing costs vary and your lender will inform you on what to expect. Saving for these costs may take time, so be sure you know what it will cost to get you into the price range of your ideal home. If you do not have the full 20% down payment, programs such as Private Mortgage Insurance (PMI) may be able to assist you.
Gathering Your Paperwork for Pre-Approval
A very important step when buying your first home is preparing all of the relevant documents before meeting with a mortgage lender. Documents you need for finding real estate include W-2 forms, pay stubs, a list of your assets, proof of your current rent, and your credit report. Having all of your paperwork together can help speed the mortgage preapproval process.
Find Your Perfect Match
After improving your credit score and saving your money, you should find a reliable mortgage lender. Finding a suitable mortgage lender is just as important as finding the right real estate agent. The right lender will provide with all the information you need before making any decisions. Make sure to ask friends and do your research online. It’s also helpful to take your time and meet with different lenders to ask about their lending process and what advice they give to first time homebuyers. The right lender can be of great help in working out the right mortgage situation before you find real estate.
Getting Your Pre-Approval
Getting a preapproved mortgage is vital in the search for your first home. The amount of your preapproved loan will determine what kind of home you can afford to buy. Having the loan preapproved will also demonstrate to sellers that you are serious about buying. But before applying, it’s important to make sure all your payments are up to date and to pay off any legal (financial) judgments against you.
Real Estate Agents
You should find a quality real estate agent, who will help you find a home that meets both your needs and your budget. Find one that will represent you in a professional manner and keep you in their best interests. Keep in mind before signing any contracts that the real estate agent works for you, though he or she typically earns the commission from the seller.
Having completed these steps, you are now ready to go forth in search of that perfect first home. For more information on home buying education resources, download our eBook now!