Prep Now to Buy a Home Later This Year

Prep Now to Buy a Home Later This Year

Buying a home takes a lot of preparation and planning. Taking care of important tasks and organizing your finances up front is essential for a smooth and successful house-hunting outcome.

Keep in mind, the initial stage of the purchasing process takes time and effort on your end before we can start working together.

Having everything in order enables you to claim your dream home the minute you find it­­––and successfully make it YOURS.

The only way that can happen smoothly is if you do your homework first, so start prepping and planning now if you want to buy a home in the months ahead––or even a year from now.

My list below will help you stay on task and be ready to buy in no time.

Do Your Homework

Here are some key activities you should do now:

Learn about mortgage options. Do you understand how mortgage rates work, such as fixed rates or ARMS? Or the difference between an FHA loan and a conventional loan? Learn what’s available now and pay attention to how rates are trending so there are fewer surprises later. Armed with knowledge about the available loan products will help you to determine what type of financing will be best for you.

Explore neighborhoods and open houses. Check out different neighborhoods for amenities, costs, and surrounding businesses. Internet sites such as Realtor.com or MLS.com will include open houses and current listings. Tour homes in person to directly assess your wants and needs. Get a better feel for what’s important to you, such as location, large kitchen, backyard, open-concept, or size of rooms. With condos, you’ll also get an idea of monthly HOA fees and amenities in different communities.

The time spent “scoping out” homes is an opportunity for a reality check and will make you more efficient when it comes time to your actual house hunt!

Find out about assistance programs for buyers.  Did you know that there are government assistance programs that can make buying a home more affordable in some cases? You’ll be intrigued to see what is available for mid-income buyers, first-time buyers, veterans, etc. Programs from local housing authorities can help with down payment or low interest loans; and many buyers can qualify for this assistance. Don’t disqualify yourself before you try. These options are meant to increase the affordability of homeownership.

Check out my “Buying a Home 101.”  This guide provides an overview of everything that needs to happen when buying a home––step-by-step from start to finish.

Get Your Finances in Order

Buying a home is probably THE biggest expense you will ever have in your life. You want to be a responsible buyer and homeowner, so now is the time to focus on your finances. Don’t do anything that could disrupt your good credit!

Strengthen your credit score and build credit history. Your FICO credit score is your gateway to a good mortgage since lenders use it to determine your risk as a borrower. The higher your score, the better your loan options. And, if you are a couple, then BOTH of you will need to work on your credit!

It can take 6 months or more to improve your score, so start today. Pay your bills on time, don’t take on any large debt, and double check your score for inaccuracies.

Know what monthly mortgage payment you can afford.  I have a rule-of-thumb when it comes to determining affordability.   For every $10,000 change in price, your payment only changes by about $65/per month.  So, don’t be too tied to the big number, instead focus on what you want to pay per month.  Plus, what a lender says you CAN afford can be very different from what you are willing to spend each month. No one wants to be stretched too much and become “house poor.”

Work backward from your desired monthly payment to calculate the price range you can afford. I can show you how to budget for a home and determine what you can afford.

Save for a down payment. Cut expenses and save, save, save right now!  (Perhaps find a high-yield savings account.) Whether you get a 3% down loan or a conventional 20% down loan, lenders still want to see that you have enough cash reserves in the bank.

Don’t forget, owning a home isn’t only about its purchase price, but it includes other costs such as taxes, insurance, maintenance, and possible HOA fees. With a larger savings account, a lender knows you are financially responsible and less of a risk.

During this time, you can even “play house” and see how you handle living with your “affordable” monthly mortgage payment. Does it work with your lifestyle?

Stay Focused with These 10 Commandments

You need to avoid some risky actions that could derail your ability to get a mortgage.  Ignoring just ONE of these items can ruin your chances for qualifying for the loan you want.

1. Thou shalt not change jobs, become self-employed or quit your job.

2. Thou shalt not buy a car, truck, or van (or you may be living in it)!

3. Thou shalt not use charge cards excessively or let your accounts fall behind.

4. Thou shalt not spend money you have set aside for closing.

5. Thou shalt not omit debts or liabilities from your loan application.

6. Thou shalt not buy furniture.

7. Thou shalt not originate any inquiries into your credit.

8. Thou shalt not make large deposits without first checking with your loan officer.

9. Thou shalt not change bank accounts.

10. Thou shalt not co-sign a loan for anyone

As you can see, start planning now if you want to buy a home sometime this year. You’ll be a more informed buyer and borrower and will be ready to purchase a new home with more confidence and less stress!

Know that I can help cut through the overwhelm, especially after the crazy market we had last year. We can schedule a time to meet, and I can walk you through how you can make a new home happen for yourself, regardless of obstacles you think are in your way.  I’ve most likely helped a client overcome the same hurdle before and I’d love to help you too.