The Home Buyer’s To Do List

The focus of this post is a topic I discuss all the time with new clients, especially first-time buyers. When you decide you want to buy a new home, how do you prepare? Specifically, how do you prepare financially? It’s best to give yourself a little time, even if you already have a “nest egg” for a down payment, so you set yourself up for a smooth buying process.

 

Buying a house is one of the most exciting, albeit a little scary, experiences we go through in life. It can be stressful because we often can’t predict what might come up during the real estate transaction. We can prepare though. My experience has proven that a prepared and educated buyer is the happiest buyer.

 

So how do you know when you’re ready to call your real estate agent to start looking? I’d like to share a few ideas to get you started:

 

Improve and Clean Up Your Credit Score: If you are planning to move within the next six months, you will want to check your credit score and get any mistakes corrected. Lenders will look at this score during the pre-approval process and it will be a factor in determining how much house you can afford. If you want to improve your score, pay down debts like multiple credit card balances, pay bills on time, and keep “good” debt that you have paid on time and paid off according to plan.

 

 

Ease Up on Credit Card Spending: Not only will this help you track and keep your finances in check, but it will help you get out of debt and become more attractive to a lender. Try using cash or a debit card more and work on tracking your monthly expenses.

 

Determine Your Monthly Outgoing Expenses: Once you are tracking your finances, you’ll easily be able to determine what your monthly bills are, including utilities, insurance, water, rent, mortgage, savings etc. Add up your bills and monthly debts like car and student loan payments, and then see what you have left over to put toward your mortgage. If you’re looking to “upgrade” your home, this will help you determine how much more you are comfortable spending each month on a higher house payment.

 

Create Your New Home Wish List: Once you know what you want to spend each month on your mortgage, begin putting together a list of what you want in a new home. How much space do you need? Where do you want to live? Do you need a gourmet kitchen or a large yard? How about a fireplace? It’s good to determine what you feel are “must haves” and what you can live without or would be willing to fix up in a home. Be realistic!

 

 

Get Pre-Approved: Next it’s time to meet with a lender to get an official letter of pre-approval. This process requires several documents, so make sure you call ahead to determine what they need and give yourself time to gather everything. This process will tell you how much you can spend on your new home and will also help you determine what type of financing is best for you. It’s great if you have a lender contact you want to work with (seasoned investors likely do), but if you don’t, your realtor should be able to recommend several local contacts for you. Have conversations with two or three lenders to compare numbers and mortgage terms before you make your final decision.

 

Meet With Your Realtor: Once the financial side is settled and you’re pre-approved, you’re ready to sit down with your agent! This is where the fun starts, so make sure you bring your wish list with you to that meeting. Your agent will listen to your wants and needs, go over your budget, and get a feel for the type of home you want. If you’ve already started looking online, give your agent those addresses to help give ideas to work with. At this meeting, your agent should also go over the various contracts you’ll encounter and the buying process as a whole.

 

Commit to Saving a Little Extra Money: There are costs associated with buying a house. Set some money aside for your earnest money payment, any closing costs you might be responsible for, and possibly some extra money to put toward your down payment.

 

Get Ready for the Ups and Downs of Buying a Home: The process of buying a new home can be a roller coaster, and you need to prepare yourself for the journey. Just know that your agent is there to guide you and fight for you every step of the way. At the end of the process, you’ll be ready to move into your beautiful new home!

 

 

 

Although I focused this information on buyers looking for a primary residence, much of it is applicable to investors as well. I hope you will find this advice helpful, and maybe it has taken away a bit of the mystery of buying a home. Good luck as you prepare — your knowledge and hard work will pay off!

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