New home sales were up by 6.7 percent in May alone. Even with these numbers increasing, moving is one of life’s most stressful events.
Buying a home doesn’t have to be one of the most stressful events in your life. If you plan on buying a home, you need to have everything in order so the process goes smoothly. Read this article to learn 8 things to do before buying a home.
1. Check Your Credit Score
You can save the most money if you have a credit score above 750. Be sure your credit reports are accurate. Check your credit score for free on sites such as Experian.
You should stop applying for new credit before you apply for a mortgage. You don’t want to lower your score.
2. Calculate How Much You Can Afford
Your monthly house payment should not exceed 28 percent of your monthly income. You will also need to figure in taxes, insurance, and utilities.
You also have to remember that there is more money to consider in addition to the monthly mortgage payment such as homeowner association fees. You should also figure in yearly maintenance costs.
3. Save for Down Payment and Closing Costs
You will need to have somewhere between 3 to 20 percent of the house price for a down payment. The amount you need depends on your loan terms and credit history.
You will also have to money for closing cost, which range from 2 to 5 percent of the home purchase price. You can negotiate to have the seller pay part of the closing costs.
4. Have a Savings Account
Having a savings account shows your lender that you don’t live paycheck to paycheck. You need to have money to pay for maintenance and unexpected home repairs. Aim to have 2.5 to 3 percent of your home’s value set aside.
5. Find a Mortgage Lender and Watch Rates
Find a mortgage lender before you start looking at houses. You will need to know your rates and if you qualify. Compare multiple lenders to be sure you have the same costs, terms, and time to close.
6. Get Preapproved for a Mortgage
After you find a mortgage lender, it’s important to get pre-approved for your mortgage. You will know exactly what you can afford. This also puts you in a favorable position when you make an offer on a house.
Here’s a list of documents you will need to get pre-approved:
- Tax returns
- W-2 forms
- Paycheck stubs from a two previous months
- All your debts such as credit cards, car loans, and student loans
- All assets such as bank accounts and investment accounts
You will want to avoid big changes like changing jobs, making large purchases, or missing any debt payments as you prepare to apply for your mortgage.
7. Find a Realtor
You need to find a realtor you trust. When looking for homes for sale in Jacksonville, FL, ask around for referrals to find the best realtors.
Be sure to interview multiple realtors to find someone you trust. You want someone that can give you the time and attention you deserve to get through the buying and home inspection processes.
8. Think Hard About Buying a Home
You can’t typically get out of a mortgage quickly. If you are looking to buy a home with a partner, you may need to consider an exit plan with payments, titling, repairs, and liability.
Looking for More Home Articles?
After buying a home, check out this article on how to make your new house feel like a home. Browse other curious articles in CuriosityHuman’s Home and Garden section.