Buying a home for the first time is a major milestone and investment for many. Because of the implications such a big decision brings, it’s important that you prepare by having a number of the following in order before making home ownership official. Below is a checklist of sorts, which includes things you should have thought through and before making the commitment.
Review Your Credit Score
Before you decide to purchase a home, you’ll want to make sure that your credit score is in good shape. If you have credit that’s less than ideal, you may not receive a good interest rate. Bad credit can even keep you from getting a loan, so it’s very important that it’s in good shape.
Get Debt in Check
It’s important that you pay your bills on time and continue to strengthen your credit score. This will have a positive influence on lenders.
Have Money Saved
Hopefully, since you’ve had this major investment in your mind, you’ve set aside money for the home’s down payment. The recommended amount is about 20% of the home’s purchase price. As stated here, not all homebuyers do this, but putting down 20% can be very beneficial in the long run, as you’ll have lower monthly payments on the home.
Rework Your Budget
The budget you’ve made is something you should continually go back to in order to ensure that you’ve covered all your bases. There’s a lot more you’ll be paying for than just the monthly payments on a new home. Think about property taxes, utilities, and more. Be sure to make a comprehensive budget that’s inclusive of all monthly payments and that can be comfortably paid for — even in times of stress, should you be out of work.
Find the Neighborhoods Where You Want to Live
Picking a city isn’t narrowing down the location decision enough. Cities are diverse with a number of different neighborhoods to choose from. Do your research and specifically pinpoint the places you’d like to be. Remember, neighborhoods can drastically change from block to block, so scope out the areas.
Gather and Review
Although this isn’t the most exciting task, it’s essential you’re organized and ready for the home buying process. Mortgage lenders will want to see a number of different documents from you such as paycheck stubs, utility bills, student loan information, and more. By organizing these documents ahead of time, you won’t have to stress about gathering them once they’re needed.