These simple steps will help you get started and hopefully help you feel a little more confident in the home buying journey. Some steps are more important than others, but I’ve got you covered to give you more clarity, confidence and general understanding of everything that comes with buying a home. I meet with buyers when they are 45 days to 1 year out from buying a home. The sooner we meet, the more time we have to be prepared. In the meantime, here are my 6 simple steps to getting started with your home buying journey!
1. Assess Your Financial Health
Check Your Credit Score: Obtain your credit report and address any issues. Aim to improve your credit score if needed, as this will impact your mortgage rates.
Save for a Down Payment: Aim to save at least 20% of the home’s purchase price to avoid private mortgage insurance (PMI) and secure better loan terms. Keep in mind 3.5% is the minimum required for down payment, so any extra savings can be used towards future expenses.
Build an Emergency Fund: Ensure you have 3-6 months' worth of living expenses saved separately from your down payment.
Reduce Debt: Pay down high-interest debts to improve your debt-to-income ratio, making you a more attractive borrower.
2. Research and Education by connecting with your Real Estate Agent
Understand the Market: Start researching the housing market trends in areas you’re interested in. Look at price trends, neighborhood amenities, and future development plans.
Home Buying Education: Sit with me and we’ll go over my HOME BUYERS Guide. This will help you to understand the process, financing options, and what to expect. And most importantly connect you with the right folks.
3. Budget Planning
Calculate Affordability: Use online mortgage calculators to estimate how much home you can afford based on your income, expenses, and savings.
Budget for Costs: Besides the down payment, budget for closing costs (usually 2-5% of the home price), moving expenses, and potential renovations.
4. Improve Your Financial Profile
Increase Savings: Set up automatic transfers to your savings account to build your down payment fund. Consider opening a high yield savings account (HYSA) to stash that cash and watch it grow!
Maintain Stable Employment: Lenders look for steady employment history, ideally with the same employer for at least two years.
Avoid Major Purchases: Refrain from making large purchases or taking on new debt in the year leading up to your home purchase.
5. Pre-Approval and Loan Shopping
Research Lenders: Compare lenders, interest rates, and loan products. Consider banks, credit unions, and mortgage brokers. Lucky you, I’ve already been through the trenches with quite a few lenders, and nailed my top 3 to best serve you!
Get Pre-Approved: Once you’re closer to your buying time frame (around 6-12 months before purchase), get pre-approved for a mortgage to understand exactly how much you can borrow.
6. Final Preparation
Stay Organized: Keep all your financial documents, pre-approval letters, and important records organized.
Maintain Financial Health: Continue saving, maintaining good credit, and avoiding new debt.
By following these steps, you’ll be well-prepared to buy a house in 2024 or 2025, ensuring a smooth and successful home-buying experience.
Happy House Hunting!
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