Are your afternoons consumed with online home searches? Do you often find yourself turning back down a street after catching a glimpse of that beautiful “For Sale” sign? Do you find yourself asking your friends and family if they like their neighborhood? You may be experiencing the beginning stages of home buying. You may feel ready to move in tomorrow to the home you just found online but if you want an easier time purchasing a home, there are a few steps you should complete BEFORE you start your search.
Give Yourself Some Credit… Literally
In the home buying process, your credit score can greatly affect your chances of acquiring a competitive home loan. The higher your score now, the lower your monthly payments will be later. Find out what your credit score is and correct any mistakes that may be on it. Find out some more helpful tips to increase your score HERE.
ADDITIONAL RESOURCE: Learn about the complicated relationship of credit scores and real estate.
Save Save Save and Then Save Some More
It’s probably not news to you that home buying is an expensive experience. From the down payment, to a home inspection, to potentially paying for closing costs, and any immediate repairs, you need a lot of capital upfront. The more you save, the less you have to take out in a loan and that will save you in the long run. Create a budget that will put you on the path to saving and stick to it!
ADDITIONAL RESOURCE: Learn how to save over $10,000 for a down payment in just one year!
Know How Much You Can Spend
Getting pre-approved for a mortgage will let you know exactly how much you could spend on your new home. This typically involves you getting a written statement from a bank. This amount is based on a few factors that include your income and credit score (we told you it was important!). By taking the time to get pre-approved, you won’t waste your time looking at homes you can’t afford and will help you zero in on the ones you can. To get a good idea of what this amount might be, do a debt-to-income ratio. The formula is that your home expenses should not exceed 28% of our gross monthly income.
ADDITIONAL RESOURCE: Find out why most Realtors will ask to see a pre-approval letter.
Scope It Out
Choosing a neighborhood can be daunting. While there are some great new online tools you can use, there are some practical steps you could take too. Ask yourself, what are you really looking for in a neighborhood? Make your list of what your ideal community would be like. Are you in need of good schools? Are you interested in a historic district and if so are you committed to complying with the regulations of living in such a community? What is your current neighborhood lacking that you wish you had? Ask yourself these and many more questions to determine what would work best for you.
Be sure to check out these neighborhoods in person and check at different times of day. Your perfect neighborhood may look cute and idyllic on a Monday morning but check back on Saturday night and see if it still meets your standards.
There are a few websites that can help by taking your criteria and filtering out the neighborhoods that match. Check out www.findyourspot.com for one such site.
ADDITIONAL RESOURCE: Learn what to look for when searching for a neighborhood.
Make A List and Check it Twice
Your wants and needs will play a large role in what type of home and community you may end up in. For example, you may WANT a yard and off street parking, but you NEED a home within your budget, located near your work and in a good school district. Sometimes those wants have to be overlooked because of the needs. By listing out and prioritizing these list items into two different categories (wants and needs), you’ll have an easier time keeping what’s truly important in perspective when you begin your home search.
ADDITIONAL RESOURCE: Discover the questions you should be asking when looking at potential homes.
Once you’ve gone through these basic steps, you’ll be more than ready to take on your home search and successfully find your dream home.