Preparation & Knowing Your Budget
- Save your money and create a comprehensive budget. This can help guarantee that once you find your dream home, you will have the money you need set aside for a down payment, closing fees and any unanticipated costs that may crop up.
- Get your credit in order; strong credit can help increase your prospects of being pre-approved for a mortgage and influences the interest rate on said mortgage.
- Determine what exactly you're looking for; this is a key component in the process of buying a home and will allow you to effectively evaluate and compare properties. Which features do you want, which features do you need, and which features are an absolute must-have?
- At times, the housing market can move swiftly; changes may come without warning and so it is important to have all of your documentation in order before you meet with your lender and find your dream home.
- Documents you should keep at hand include personal identification, W2s, updated pay stubs, proof of current rental and/or mortgage rates, a printed financial history (recommended 2 years of documentation), and an inventory of your assets.
- Once you've selected a lender that you think is best, apply to be pre-approved for a mortgage and find out just how much you can afford to spend. This will help you narrow your search down to properties that you can afford.
- Research is critical for both lenders and real estate agents; consult and compare personal and online reviews carefully. Be on the lookout for reliable real estate agents and mortgage lenders who will work with you and your budget.
- Before you present an offer, hire an inspector and evaluate existing issues with the home; the inspection is a critical step in deciding whether the home falls within your budget, as there may be major repairs needed that are not visible to the untrained eye.
- Consult with your real estate agent; they will help you to formulate a strong yet reasonable offer.
- Once you've reached a deal, you can begin finalizing your mortgage and will be expected to provide your down payment. Private Mortgage Insurance is available for those who do not have the full 20% down payment on hand.
- It's time! Gather your down payment funds and prepare for closing day!
The process of buying a home is exciting yet complicated, and should be handled with care and by being educated about each step of the process. For more information about the home buying process, download our eBook now!