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7 Steps to Take Before You Buy a Home

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This time of year, many people begin to consider purchasing a new home. It’s a new year and a fresh start, the holidays are over, and folks are spending time considering what the next year will bring. If you find yourself thinking a new home purchase is in your future this year, consider taking these seven steps now to prepare.

1. Decide how much you can afford.

Evaluate your gross income and monthly expenses and determine how much home you can afford. Be sure to consider the home’s sales price, property taxes, insurance, maintenance, and utilities as well as your personal monthly expenses (cars, child care, health insurance, etc.)

2. Develop your home wish list.

Evaluate what you’d like to have in a new home. What are your must haves? What things would be a nice bonus? Off-street parking may be a must, while granite counter-tops would be a bonus. These things are different for everyone. Develop a list so that you can advise your realtor exactly what things you’re looking for in a home. This list can also help you to make a logical home choice, rather than an emotional one.

3. Choose where you’d like to live.

Consider neighborhoods, commute time, and school districts. Here in Lancaster County, home searches are typically refined by school district first. Then you can decide if there is a particular area within a school district you’d like to focus on. For instance, you may look at home in Penn Manor, and then decide to focus on the Millersville area. Perhaps you’d like to look at homes in Warwick, and then narrow it to homes within walking distance of downtown Lititz. Deciding these things up front will narrow down your home selection to a more manageable number.

4. Start – or continue – saving.

There are a lot of misconceptions on how much money you need to purchase a home. Check out our previous blog post here to consider exactly how much you’ll need to have saved. Start saving now (if you haven’t already). Beyond the down payment money, you may need money for home inspections, appraisal, movers, etc.

5. Find out all the costs (before you sign).

In number four we mentioned a few additional things that you may money for when purchasing a home. Your real estate agent can assist you with a comprehensive list of all the fees involved in home buying, and even break fees down for you when you decide on a specific home. This is one of the reasons it’s so important to use a buyer’s specialist – so that you are aware of everything up front.

6. Determine your credit score.

A credit report will give you a history of your credit along with your credit score. There are several agencies who will provide you with a free credit report. Lender’s rely heavily on credit reports when determining whether, how much, and at what interest rate to lend you a mortgage against a home. It is best to discuss with your real estate agent or lender what your credit score is, and how it will impact your mortgage options. There are often things that you can do to repair or raise your credit score that can help you get better terms from a mortgage lender.

7. Get pre-approved.

Talking with a lender prior to your home search is crucial. A mortgage lender can spend 5-10 minutes with you on the phone collecting some preliminary information and they will be able to tell you how much of a mortgage you qualify for. They will also give you the list of documents you’ll need when applying for a mortgage so that you can begin to collect those documents. Things like your W2’s, old tax returns, bank statements, etc. Mortgage lenders will also review the various financing options that are available to you so that you can decide which is the best suited for your personal needs.

 

 

 

 

 

 

 

 

 

 

 

 

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