Steps to Buying a House: Your Checklist & One-Year Plan for Home Buyers
When it comes to purchasing a home, whether you're a first-time homebuyer or haven't been through the process in a while, the process can be confusing and often misleading. While you may have house hunger and be desperate to settle down, there are certain financial obligations that have to happen before you can even approach the table.
We've outlined the steps it takes to buy a home and a simple one-year checklist that sets you up for home-owner success.
One Year Out
1. Check your credit
Credit plays a big role in whether or not you can even get approved for your home. Start monitoring your credit early with free tools like Credit Karma. You can also pull an annual free report that tells you how you can improve your score at AnnualCreditReport.com. Credit scores largely impact your interest rates when taking out a mortgage, and in some cases, can even impact whether or not you get approved. Check your credit frequently and fix any blunders that are holding you back.
2. Save, save, save!
If you're serious about purchasing your next home, it's important to bring some collateral to the table for your down payment. A minimum ten-percent down payment will give you the most options with your financing, so in order to secure a loan, be sure to save and have your down payment as a goal.
3. Pay your bills on time
While you're doing everything you can to ensure your credit and down payment are underway, be sure to keep tabs on current bills. Don't fall behind on any payments or accidentally forget to pay any bills - one single 30-day late payment can impact your FICO score by 100 points!
Six Months Before You Buy a House
1. Start researching mortgage rates and options
Start educating yourself on current mortgage rates and your local market. Learn about fixed rates versus variable-rate mortgages, and what is right for you.
2. Evaluate the cost of homeownership
The cost of owning your own home goes well beyond your mortgage payment. Consider the cost of homeowner's insurance, property taxes and the additional funds for repairs. Be sure that you are fully ready to commit to owning a home before you purchase.
3. Check-in on your savings
Now is the time to re-evaluate your savings. Double-check that you are on the right path to affording your new home. The industry standard is 20 percent of your home's price.
Two Months Before You Buy a House
1. Apply for your mortgage
Now is the time when you finally get to see all of your hard work pay off! Make sure you do all of your mortgage research and shopping in one short period as approvals only last a certain amount of time and this will limit the effect of dings on your credit score each time your credit is pulled. Once you are approved for a set amount, you should start home shopping!
2. Start shopping
Now it's time to start narrowing down where you want to live and contacting a realtor to help you in your home search. Remember, for buyers, it costs nothing to work with a reputable realtor who protects you throughout the home-buying process!
Time to Buy Your Home!
When it comes down to time to buy your home, you'll want to work with a licensed, reputable realtor. They will walk you through the whole process from getting an appraisal, an inspection, and doing a walk-through if necessary to double-check there are no unexpected issues. Once you put in an offer and it is accepted, you will go to closing. The last step is to get homeowner's insurance for your new home.
That's it! The home buying process can seem scary or too intimidating at first, but if you give yourself a year to prepare, chances are you can achieve your goal and buy your dream home!