6 Things First-Time Homebuyers Should Do Before House Hunting
When we think about buying a house, we might envision all of the good times we will have entertaining and enjoying a place of our own. We’ll no longer have to deal with a landlord raising our rent each year or making rules about what we can and cannot do with our space. Best of all, our children and future generations will have a piece of the American Dream.
But before you get too far in your visualizations and start visiting properties, there are practical details to consider. Will you qualify for a mortgage? Have you saved enough for a downpayment? Do you even know where to begin the homebuying journey?
Buying a house can be overwhelming, especially for a first-time homebuyer who has never gone through the process. But by taking the following steps before you start house hunting, you can ensure that the homebuying process goes as smoothly as possible.
Any experience can feel scary if you’ve never been through it before. It’s natural to feel uncomfortable about buying a house if you don’t know what to expect. Not only that, but buying a houses is such a large investment that the last thing you want to do is make a mistake.
One way to tackle the fear and to lower the odds that you’ll make a mistake is to get some financial education. By taking a homebuying class or scheduling some time to speak with a Homeownership Advisor, you will learn what steps you can take to increase the likelihood that you’ll be approved for a mortgage. You will also learn about special programs that may save you money. Nonprofit homeownership organizations serve as your partner through the homebuying process and can walk you step-by-step through the process.
Improve your credit score.
Before going house hunting, you must know your credit score because it’s one of the factors that determines the interest rate you get on a mortgage and whether you’re approved for a mortgage at all. While you don’t need perfect credit to buy a house, you will likely get more favorable terms on a mortgage the higher your score.
You can check your credit score using the free TransUnion CreditViewä Dashboard. This tool will also tell you what factors are hurting your credit and give you tips on ways to boost your score. A Homeownership Advisor can also assist you in improving your credit by helping you come up with a plan that works for you. For example, you may be able to raise your credit score simply by paying off one outstanding bill. By focusing on your credit score at the beginning of the homebuying process, you’ll have time to make improvements to your credit profile that will save you money over time.
Take control of your budget.
Are you in control of your money or is your money in control of you? If you’re running out of money before the end of the month you may want to make a few changes. Without a budget, you may overspend or go into debt. Those financial behaviors can lead to late payments and a lower credit score.
Not only should you be budgeting for your everyday expenses, but you’ll want to create a budget to determine how much of a house you can afford. Remember, your homebuying budget should not just look at how much the house costs, but it should look at how much you might spend on maintenance and repairs over time.
Learn about financial resources.
No matter how much money you have in your bank account, you may benefit from programs that will allow you to spend less of it. There are downpayment and closing cost assistance programs that allow homebuyers to keep more by spending less during the homebuying process. Some first-time homebuyers save tens of thousands of dollars through downpayment assistance programs.
You can find out about these programs and how you can qualify by contacting a Homeownership Advisor or taking a homebuying class. If you spend less on a downpayment, you’ll have more money to decorate your home, take that vacation, or invest.
Find a realtor you can trust.
Just as a homeownership organization can help you prepare to buy a house, a realtor can help you find and evaluate potential properties. You can ask friends for references. HomeFree-USA can also help to put you in touch with real estate professionals that may be able to help you. Realtors have an understanding of the housing market and can help you land the best deal whether you’re in a competitive housing market or not.
Before you start looking at properties, it’s a good idea to find out whether you’ll be approved for a mortgage now or if you need to take some time to get better prepared. Getting pre-approved is a way that you can do this. In order to get pre-approved, a mortgage lender will look into your financial history and confirm your credit score and sources of income to determine whether you qualify for a mortgage loan. The lender will also let you know how big of a mortgage you will qualify for so you can start your home search looking for properties that fall into that price range. Getting preapproved can speed up the homebuying process, and it may even give you an edge over other buyers if you’re in a competitive housing market.
There’s a lot to learn throughout the homebuying process. And finding the right home for you and your family should not be taken lightly. But by taking certain steps before you begin actually looking at properties, you’ll put yourself in the best position to experience success.