Buying a home is a lengthy, complicated process. It involves walking through open houses, procuring a mortgage, negotiating a final offer, and following through the closing process.
Since purchasing a home can be such a strenuous and stressful effort, first-time homebuyers are often not well-prepared, which can lead to additional stress. Guaranteed Rate has key tips to make your home purchasing experience a bit easier.
- Utilize online tools to research mortgage rates and lenders. Do not go with the first mortgage lender you talk to – it’s important to shop around and utilize online tools for research on rates and lenders. Try to talk to a few different mortgage lenders to get a better sense of which one might be a better fit for you.
- Get pre-approved for a mortgage. Don't shop for homes without getting pre-approved first – home sellers and agents need to know you can afford a house before receiving any offers. While achieving a pre-approval does not mean that you are guaranteed to be approved for a mortgage, it is a good first step and many times will be required before an offer is accepted on a home. During the process of getting pre-approved, your lender will pull a credit report and can also provide guidance of how your credit may impact your home-buying potential.
- A 20% down payment has its benefits but is not always required. Do not assume you need a 20% down payment – mortgage lenders often have down payment options as low as 3%. Make sure to discuss any implications with your mortgage lender.
- Buy a house that you can afford. Utilize a mortgage calculator tool to understand the financial impact a mortgage has over time and month to month. Alternatively, if you work with a financial planner, talk to them to understand what you can afford based on your current financial situation.
- Avoid making big purchases using debt. Any big purchase can impact your credit and require any mortgage application be reevaluated. Hold off on making big purchases until after you close on your home and always make sure that you can afford those big purchases. Owning a home brings additional monthly costs (maintenance, repairs, etc.) that you may want to factor in.
- Try to pay off your credit cards. Don’t max out any of your credit cards – Debt to income ratio is an important consideration for your mortgage rate. If you have a lot of credit card debt, consider paying some of that down before you begin the process to purchase a home.
- Schedule a home inspection. Do not skip the home inspection – home inspections protect the buyer. It is important that you have a third-party inspect the home for any potential issues. Any issues that your home inspector finds may be negotiable when deciding on a final price, or may be a good sign to continue looking for the perfect home.
Buying a home is one of the biggest investments you’ll ever make – if not the biggest. By following the guidance outlined in these 7 steps, you can set yourself up for success as you start searching for your dream home.