Purchasing your first home is one of the most exciting and intimidating achievements you can have. To ensure that your purchase is done responsibly and you’re able to get the home you want, it’s essential to make sure that you take the right steps to get from thinking about buying a home to making an offer on your chosen home.
Buying a home is a long process, and if possible, it should start well before you’re ready to start seeing potential houses. If you want to buy your own, here are ten key steps to get you to the big day you finally make an offer and have it accepted.
1) The Sooner the Better
There’s no such thing as preparing too soon when it comes to buying your first home. With the need to build up a sizable deposit, and the slow process of improving your credit score, the sooner you start preparing to buy a home the better.
If you wait until you’re ready to buy to start taking any steps to accomplish it, you may be unpleasantly surprised to discover how many months or longer you’ll be waiting before you are actually in a position to make that purchase.
Start acting like you’re in the market now, and you’ll be more likely to be ready when you want to buy.
2) Check Your Credit
When you’re looking to secure a mortgage for your home, it’s important to have a strong credit score. Not only does a higher score allow you to seek a larger loan, allowing you to expand the size of your home search, it can also help you to secure better rates to reduce your overall spending in the long run.
If you’ve never checked your score before, you may be wondering, “how can I check my free credit score?” The good news is it’s never been easier to find and monitor your score.
In addition to every citizen being entitled to a free annual credit report, online and app-based tracking tools can help you to monitor how your behavior is affecting your score in the months between your yearly checks.
3) Create a Credit Improvement Plan
Once you know where your credit score is and how you rate in the six categories that comprise it, you can start addressing areas where you don’t score well in order to improve on them. The best way to raise your score is to simply keep making monthly payments on all accounts every month.
This will help you to raise your rating in the three biggest factors by improving your payment history, lowering credit utilization, and avoiding derogatory marks.
4) Start Saving for a Down Payment
In addition to a mortgage, you will need a down payment when purchasing your home, and the larger your down payment is, the better your terms will be.
If you don’t have at least 20-percent available for a down payment, your mortgage will also include mortgage insurance costs.
5) Set a Budget and Get Prequalified
It’s important to find a home that fits your finances to avoid getting into a mortgage you can’t afford. Take an honest assessment of your income and savings and find a budget you can safely maintain, then get in touch with lenders to get your prequalification that will tell you how much you can offer on a home while knowing you have a mortgage to back the bid up.
6) Make a List of Wants and Needs
When house hunting, it’s important to know what you’re looking for in a home, but also to know which of those items you are capable of forgoing for the right house.
There will likely be a lot of available options to look at, and using this list you can effectively begin to make your first round of eliminations to start narrowing down your focus.
7) Choose Your Location
If some of your wants and needs are location specific, you should eliminate any regions that fail to satisfy those needs. This is a great way to narrow the focus of your search and begin to hone in on your leading options. I
f there’s a specific town or region, you want to be in, that’s all the better as it can provide extreme focus on the breadth of your search.
8) Find a Realtor
The home buying process is a complex one, and it’s vital to have an expert by your side to help you through it. Finding a buying agent you can count on provides you with the expert guidance you need to identify the best fits for you, check to make sure they’re as great in person, and put in a calculated bid to help you land the home you want at the best possible price.
9) See Them In-Person
Online listings have changed the game when it comes to finding possible housing options; however, you still can’t beat an in-person visit when it comes to finding the right house for you. Any homes that make it through your previous screening are up for visiting until you find the one that best catches your eye and elicits an offer.
10) Make an Offer
The biggest decision you’ll make after finding a home you love is deciding how much to offer as an opening bid. This is where the experience of a realtor can be so helpful. Your realtor should be able to use their understanding of the market, and an assessment of the accuracy of the asking price, to help you to find an opening bid.
When in doubt, bidding below what you are willing to pay to provide yourself with negotiating room is usually, although not always, the best option.
Homeownership is a thrilling and fulfilling endeavor, and by following these steps, you can approach it on a path to success. Start saving and behaving responsibly with your credit, and you’ll be ready to buy your first home before you know it.