Whether you have decided to buy a home in Rosemary Beach Florida or Los Angeles California you ought to plan for the process. This is a major financial move and making it without proper planning can get you in a mess. Planning should be done a year or 6 months before the purchase. You’ll avoid the last-minute rush that can easily land you in a quagmire that will take months to dig yourself out of. Here are the things you should do in preparation to buy a house:
Check your credit
There is no way around this – a good credit score is necessary before you buy a home. It will prove you have been paying previous debts on time. Also, with a good credit score, you will get a low-interest rate mortgage loan. Therefore, buying a home will be much easier and affordable. Make sure you order a copy of your credit report from the three major credit bureaus(TransUnion, Equifax, and Experian). For a small fee, they will also indicate your credit score. When you know where you are at it will be easy to figure out what has to be done in improving your credit score.
Start saving for a deposit
A 20% down payment is highly recommended to avoid the much-dreaded PMI. Depending on the real estate market and your region, PMI monthly payments can go as high as $1000. You’ll also have to pay for closing which is usually expensive as well. On the same note, you need to convince the lender you can afford house payments higher than your current rent, especially if renting is cheaper than buying in your region.
You need to note down your expenses before the money gets into your account. You should account for every dollar you spend. Once you have created your budget, check where you can cut on spending so that you can save more. Extra shifts or a side hustle to help increase income is highly recommended when your income is not sufficient to cover all your bills. You can even sell the things you don’t need.
Consult a lender
Talk to several lenders to get an idea of where you stand when it comes to getting a mortgage. If you don’t qualify they’ll give you pointers on the changes that are necessary to improve your situation. Take heed and start working on that.
Apply for a mortgage pre-approval
Determine your budget for the house and apply for a mortgage pre-approval. Looking for houses with an approval letter makes things easier because you can make an offer immediately you find the perfect house. Also, you will be fully aware of the amount you can get toward purchasing the house so that you won’t waste time looking for houses you can’t afford.
Check down payment assistance programs in your area
You don’t have to be dirt poor to qualify for these programs. Explore the available options and find the ones you qualify for. Apply to as many as possible to increase your chances of qualifying.
Come up with a budget for the purchase
You’ll need to find out the average cost of houses in the neighborhood you want to buy at. This should then help you come up with a personal budget for the purchase. If the houses are way beyond your budget you can explore other neighborhoods where you won’t have to pay through the nose for the purchase. Ensure the monthly payments for the house won’t be more than 25% of your net income.
Take classes or attend a seminar on buying a home
Real estate agents and lenders offer free seminars for first-time homebuyers. Some nonprofit agencies and even the local government do run such programs too. You’ll get helpful information in preparing for the financial responsibilities that come with being a homeowner.
List down the neighborhoods you are interested in
Unless you have already figured out where you would like to buy a house check out the potential neighborhoods. Have a list of the amenities you consider crucial. These can be schools for those who have families or transportation options. The more the locations you visit the better your chances of finding a house you like.
Visit open houses
This allows you to see whether what is available in the region is fitting as far as your budget goes. It will also be a chance for you to determine the factors that should take priority when you are making the final decision. Do you prefer a cool location or do you want a house with a big enough space for you to entertain?
Pick a real estate agent
Buying a home will be much easier when you have the help of a real estate agent. During the open house sessions, you will get to meet and interact with these professionals. This will be a good opportunity for you to discover more about each one of them. You will already know who to invite for an interview once you finally decide to go ahead with the process.