First time home buyers often don’t realize the sheer amount of steps needed to purchase a home. It can become a complicated process without some forethought and planning before diving in. While there are several steps to buying a house, here’s a few you need to consider right off the bat.
1. Make Sure You’re Ready to Start – How Are Your Finances?
Before attempting to buy a house, there are a few of things you need to have in order.
Your credit – Check your credit score. If you need to improve it, then start working on it immediately. You want to be sure that any blemishes on your credit are rectified before applying for financing.
Your down payment – Do you have close to 20% of the purchase price of a home saved up? If not, there are down payment assistance options. However, it is best to start saving up before attempting to buy a house for the first time.
Additional funds – Do you have the money saved up to cover other new home expenses? Additional expenses that arise when buying a new home include:
• Inspections and applications
• Insurance and taxes
• Closing costs
Various other costs can come up as well. Try to save up an additional 5% of the cost of a home to cover all these costs and eventualities.
2. Seek Preapproval First, Don’t Wait Until Later to Look for a Mortgage
A pre-approved mortgage will help you in a number of ways. It will save you time, and make your offers more appealing to sellers. It makes the selling and the buying process far quicker and easier to navigate.
If you already have your finances in order, pre-approval shouldn’t give you too many problems. Before shopping around, gather all your financial data.
• Tax Returns
• Proof of income
• Proof of expenses
• Proof of assets
About two to five years of financial data should suffice depending on the financial institution.
3. Look for a Local Lender & Real Estate Agent
A local lender will know the area, most likely have more time and effort to put towards your specific mortgage and will be there to answer questions every step of the way.
A local agent will know the neighborhood you have your eye set on. They will have a good understanding of the real property values there. They will also know how the process works in that particular area. This can save you a lot of time and effort.
These aren’t all the steps to buying a house. However, these steps will put you on the best possible path to home ownership with as little hassle in the process as possible. For more steps to buying a home and home buyer education, download our eBook now!