Buying Checklist: 7 Ways To Prepare To Buy Your First House
The time has come for you to buy your first home. You have a good job. You think your income is enough to add a mortgage to your monthly bills. Take a look at these seven tips to see if you are as prepared as you need to be.
1. Check your credit score
One of the first steps you need to take when buying a home is to check your credit rating. This will tell your lender how you've done in the past with paying your bills, other credit lines you might have out, and generally how you handle your money. Requirements change periodically about what scores are acceptable when borrowing from banks and other types of loans you will qualify for.
2. Decide what type of loan is best for you
Your repayment will differ depending on what type of loan you get. Borrowing from a family member when you're buying a home could be tricky. Make sure to put the details in writing. An FHA loan could be best for you. The down payment will be a lower percentage of the total home loan if you get an FHA loan. Make sure you check interest rates for all lenders you are considering.
3. Clean up your credit
You will know your problem areas after you check your credit report. Buckle down on your expenses and frivolous expenditures so you can get caught up on bills. Pay off anything you can, and don’t start any new credit for the time being. You will look more responsible to lenders the more orderly your credit is. It is better to take a little longer and clean up your credit on your own than to sign up with a company that offers to fix it for you.
4. Save up
Saving up is one of the toughest parts of buying a home. You can start saving after you get bills paid off or at least paid down. Decide if you are saving for the down payment or if you want to pay cash for your home. A loan won’t be necessary if you choose to pay cash, but the saving time will be longer. You can always pay off your loan sooner than the 15 or 30-year term if you want to.
5. Get pre-approved
One headache you can get rid of fast is to get pre-approved. You will find out how much you can spend on a new home based on your income and other expenditures. Now comes the fun part – finding the right home for you.
6. Find your new home
You now know what your limit is. Decide where you want to live. Drive around your neighborhood or the neighborhood where you want to make your new life. Check out open houses and make appointments with Realtors to see prospective properties.
7. Make an offer
You’ve saved enough and you’re ready to make an offer. Your Realtor will guide you through the process. There will probably be some back and forth between you and the sellers. You might have to see more than one home. You and the sellers will come to a compromise if the home is the right one for you.