7 Thing You Have To Do Before Buying A House

Dated: 11/13/2018

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“Wanting” to buy a home and “being ready” to buy a home are two completely different things.

Even as many are still hoping to achieve their American dream of buying a home, that doesn’t mean everyone is financially prepared. Here are seven things you need to do before you buy your home.

1. Pull your credit report and check your score

Your credit report and corresponding score are your golden tickets to buying a home. They showcase your credit responsibility and worthiness. Your credit score can seriously impact your mortgage rate. The higher your credit score, the lower your interest rate. This means you’ll end up owing a lot less money over the life of the loan. If you would like to find out your credit score for free contact me for more details.

2. Review your budget

Your debt-to-income ratio, or DTI, is important to lenders for determining your purchasing power and if you’re a good candidate to receive a mortgage. You might discover you need to make some adjustments, like spending less on travel and clothing, for example, to make room for a mortgage payment. Fine-tuning your budget pre-homebuying will allow you to put extra cash towards a down payment, closing costs, or potentially higher home costs than you’re paying right now.

3. Get pre-approved for a mortgage

With a solid credit score and a decent down payment built up, you might feel confident in buying the house of your dreams. But until you get pre-approved, that house will stay in your dreams.

Getting pre-qualified is nice, but it’s not the same thing. A pre-qualification is only based off information you give a lender. A pre-approval is completing a mortgage application that pulls all your financial records.

Lenders base how much money they’re willing to give you based on your entire financial existence: your income, debt, and credit history all play a crucial role. But it’s also there to show you how much home you can afford. If you know you can only get a $200,000 loan, you won’t waste your time looking at half a million-dollar homes.

4. Beef up your downpayment 

Down payments for homes and cars are very similar: the higher the down payment, the less each monthly payment will be. But homes are much more expensive, which means the more you can put towards your down payment, the better off you’ll be every month.

It can be difficult to keep stashing money away for a down payment when you’re trying to afford basic necessities right now. Try cutting back on things you can manage, like dining out, grocery spending, unnecessary purchases, and travel.

Your debt might be holding you back as well. Try making larger debt payments every month until it’s completely paid off. Then the money you were putting towards your debt can now go to your down payment fund.

5. Get a real estate agent (ME)

Whether you’re looking for a home 300 miles away or three, it’s a good idea to find someone who knows the neighborhoods better than you.

A real estate agent is on the hunt for your best interest because they want you to find the right home and buy it. Agents have a fiduciary duty to their clients. That means they have an obligation to act in the best interest of their clients. Also, agents get their commissions after a home is sold, so you don’t have to worry about costs up front.

 6. Don't skimp on an inspection 

You might think getting a home inspection is unnecessary. After all, you viewed the home yourself and you would’ve seen major issues. True, maybe you can spot the big problems, but what about the small ones?

Home inspections go over every single detail of your home, from walls and appliances to the roof and drainage. Getting an inspection is a major part of buying a home because if there is, say, a water leak, you can take this issue back to the seller for negotiation. Either they fix the problem before you buy it or they lower their asking price of the home to accommodate the new cost of fixing the leak.

7. Make a plan B (and C)

As you’ve diligently prepared for your future home, you might not have considered what might happen if it doesn’t work out. What if your down payment is a little low? What if you don’t get the lender with the best terms? What if your dream home has an old roof?

Regardless of the setback, build the “just in case” options into your plan. If your down payment is too low, maybe you get an FHA loan instead of a conventional one. If you don’t get the lender with the best terms, maybe you get the second-best terms. That old roof may save you a lot if you talk the seller down, but you’ll need to make sure you can afford to replace after you close on the home.

Throughout the entire home-buying process, you will face different options for every single step you make. It’s important to remember how your choices are impacted along the way.


Laine Murray - Realtor

817-908-3373

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