8 Steps When Preparing to Buy a Home
Advice for first timers and veterans alike
When it comes to buying a home, a lack of knowledge and experience can lead to costly mistakes. Whether you’ve purchased a home before or if you are you’re a first-time homebuyer, the following steps will help you prepare for one of the largest purchases you’ll make in your life.
1. Adjust Your Budget
A mortgage payment can increase your monthly housing expenses. You can prepare by calculating what that amount will be and begin saving that same amount every month. That way, you get used to the financial adjustment in advance. Use our calculators.
2. Plan for a Down Payment
Nearly all home loans will require you to put some money down. Decide on the amount you think you'll need and create a savings plan to help you reach that goal. Set up a separate savings account along with a systematic savings plan that helps you reach your goal. You can also ask us if you qualify for down payment assistance.
3. Consider the Location and Type of Home You Want to Buy
Many factors influence the cost of a home, including its location, size, style, neighborhood, land mass, and more. Knowing the estimated cost of the type of home you want to purchase can help you better manage your budget.
4. Stay on Top of Your Credit
Lenders will consider your credit score and report history when determining your mortgage eligibility and the interest rate they may offer you. You can download a free credit report once a year from all three major bureaus at www.annualcreditreport.com. Sit down with a mortgage specialist to review the report.
5. Keep Current on Monthly Bills
Paying your bills on time every month can help increase your credit score , and a good payment history is something lenders look for when reviewing your credit report.
6. Work on Your Debt
If you have delinquent balances, bring them up to date as quickly as possible. If you carry a lot of revolving credit card debt, you may want to work to reduce it by paying more than the monthly minimum payment.
7. Plan for Escrow
Escrow is an amount of money added to a special account. It is collected with each monthly mortgage payment and is applied toward annual homeowners' insurance premiums and/or taxes. Estimating taxes and total insurance costs can help you better understand how much your total payment will be each month. Don't forget that your escrow amount may adjust every 12 months if your insurance premium or taxes change for the next year.