They say buying a home is one of the top most stressful events a person will experience in their life. If you make a plan ahead of time you can avoid a lot of undue stress and actually enjoy the path to home ownership!
5 Steps to Take Before Buying a Home
Play around with a Mortgage Calculator to get a real idea of how much you will comfortably be able to afford to pay each month. The truth is the mortgage companies are in the business to make money just like anyone else. The are not your friend.
When you apply for a mortgage loan, chances are the amount they want to offer you will be much more than you can afford. It will be tempting to take the full amount of the loan and get a house that is better than what you thought you could afford after checking the mortgage calculator.
Resist this temptation! You already know what you can afford, trust yourself in this situation and stick with the number you decide upon before you even call a mortgage company.
Work on your credit score. As much as I would love to say it is not necessary to have a healthy credit score, that you don’t really need it if you pay cash for everything. The reality is that for most of us it is important, especially when it comes to applying for a mortgage.
You will be able to secure a loan with a much lower monthly payment if you have a credit score that is over 700. This will help you to avoid higher down payments and interest on your loan. Use a site like CreditSesame to check your score FREE and give you FREE credit Monitoring along with ways to raise your score to a healthier spot if you need to.
Save Your Money. I know that most lenders will allow for 10% down payment, but I suggest doing all that you can to come up with a 20% down payment instead to keep your monthly payment lower. It also helps to have a larger chunk of money to work with when you are in negotiations with the seller or the lender.
I highly suggest having an emergency fund of at least $10,000 in place because what no one will tell you is that there are going to be hidden costs with a new house and having some extra money set aside will make the move less stressful.
Create a List. While you are working on saving money and raising your credit score, it is a great idea to sit down with a pen and paper and write down everything your new house must have.
Then write a second list of what you want your new house to have but you could live without.
When you begin looking at houses, it will be easy to forget something that might have been on your must have list. Especially if the house happens to have a few things on you want to have list. Remember one list you can live without, make sure you are sacrificing something you can’t live without.
Get your Pre approval letter. Although I want to make sure you understand that this does NOT guarantee that you have the loan, it will make realtors takes you seriously when you show up. This tell them that you are in a position to get a loan at some point and allows everyone involved to know how much you can afford. Be prepared, when that point comes you will have to jump through a lot of hoops to actually secure the loan.
Now that you have completed all of the steps above, you will find yourself in a great position when you begin to search for your new home!
Buying a home is a big step and requires some work if you want to make sure you are getting the best house for your money. My husband and I spent almost 4 years planning and preparing ourselves to buy a new house. We followed all of the steps above and it made things much smoother.
Each of the steps above were critical to the process both during and after our move.