10 things you should do before buying a house

Buying your first home can be an exciting prospect, but it can also be stressful and overwhelming without the right preparation. This list of 10 things you should do before buying a house will make your first home-buying experience an enjoyable and fruitful one. If you don’t have enough money saved up, consider this guide on how to buy a house with no money down instead.

1) Know your credit score


Know your credit score and get it updated yearly so that you’re not spending time looking for a loan only to find out that lenders won’t approve the application.
Check with your current employer to see if they’ll let you take some time off from work, or even give you an unpaid leave of absence. If they say no, then ask them to reconsider and be proactive about trying to negotiate. You never know, their answer might change if they understand how much this means to you.
Visit your doctor for a physical examination so that there are no unforeseen health complications when it comes to obtaining housing. Your doctor can also provide documentation in case the lender requests proof of good health as well.

2) Get pre-approved for a mortgage


It’s important to have your finances in order when considering homeownership. If you are serious about becoming a homeowner, then take the time now to explore your options and get pre-approved for a mortgage. A mortgage pre-approval is an estimate of how much you qualify for based on your income, credit rating and other factors. A lender will be able to tell you the maximum loan amount that they would approve for you at this time. This can give you peace of mind knowing how much debt will be supported by your monthly payments.
You may also need to submit documents like bank statements, pay stubs, or tax returns as part of the process; these should be handy so that it does not delay getting approved for a mortgage.

3) Shop around for the best mortgage rate


It’s important to shop around for the best mortgage rate. The difference in interest rates can be considerable and will save you money over time. It’s also important to get pre-approved for the loan, which guarantees the bank that it will lend to you up to a specific amount if your home search is successful. These two steps alone will streamline your home search and make it more likely that you’ll find what you’re looking for on your first try.

4) Save for a down payment


One of the most important steps in the home-buying process is saving enough money for a down payment. The down payment is typically 20% of the purchase price, which means that if you’re looking to buy a $200,000 home, you’ll need to have saved up at least $40,000. While this might seem like an impossible task (especially if your credit score and income are low), it’s possible to save for your future home with some creative ideas. Here are 10 ways to help yourself reach that goal:
1) Make sure your budget can handle any unexpected emergencies or expenses – these costs could come at any time and really throw off your savings plan if you don’t account for them.

5) Get rid of debt


1) Get rid of credit card debt. If you have any credit card debt, pay that off first. Your monthly payments will be lower, and your interest will stop building up.
2) Buy renter’s insurance. You’ll want to make sure your belongings are protected in case of theft or fire.
3) Pay off your student loans. Student loans can be tough to deal with because they’re deferred until after graduation, but the sooner you pay them off, the better your financial situation will be when it comes time to buy a home.
4) Keep an emergency fund on hand.

6) Stay employed


It might be tempting to buy that perfect home you’ve been eyeing, but it’s best not to make any big decisions when considering your first purchase. Here are 10 things to consider before making the move:

  • how much of a down payment can I afford?
  • am I in the right place for my career? – what is my exit strategy?
  • is this home in an area with good schools and ample opportunities for children?
  • will this home fit the needs of all members of my family, including pets?
  • is there enough room in the budget for maintenance and repairs?
    If these questions have left you feeling overwhelmed or uncertain, don’t despair.

7) Know what you can afford


Before you jump into the real estate market, make sure you are making wise decisions about your budget. Here are some questions to ask yourself to determine what kind of home is realistic for your needs:

  • What is my monthly income?
  • What is my monthly debt payment?
  • Do I have an emergency fund?
  • How much would I like to pay in monthly mortgage payments?
  • Am I willing to take on a higher interest rate because of my credit score?
  • How much am I willing to spend on a down payment? Is that more or less than 20% of the purchase price of the home?

8) Don’t buy too many house

  1. Don’t buy too much house: If you’re the type of person who doesn’t want to spend more than they need to, it may be wise to curb your enthusiasm when deciding how big or expensive of a home to buy. Buying more houses than necessary is an expense that can cost tens of thousands or even hundreds of thousands of dollars over the course of your lifetime.

9) Have realistic expectations

  1. Be realistic about what you can afford: The mortgage calculator on the bank’s website may give you an idea of what your monthly housing costs will be, but this doesn’t take into account other expenses such as utilities and property taxes. Additionally, if you make a large down payment, your monthly payments will be lower. You can calculate these numbers by using the mortgage calculator on the bank’s website or by talking to someone in the loan department at your bank.

10) Have an emergency fund


It is important to have an emergency fund to cover costs when unexpected expenses arise. An emergency fund needs to be long enough that the expenses will not be covered by the sale of your home if it had been put on the market. It is also important to keep in mind that emergencies come in all shapes and sizes, so it is vital that your emergency fund can cover any cost, not just those related to home ownership.
A good rule of thumb for an emergency savings account is six months’ worth of living costs. For example, if you need $5,000 per month to live comfortably (including housing), then your emergency account would need $30,000.

Compare listings

Compare