If you’re currently renting, buying your first home may seem unattainable. You may dream of the amenities like storage, a yard, a garage and a decorating any way you but you may also feel stuck renting due to finances, fear or frustration of where to start. Here’s a one-year checklist to help you navigate the ups and downs of purchasing your first home.
12 Months Out – Obtain your credit score. The three credit bureaus are each required to provide you with a free report annually. Double check that the score is accurate and if it’s on the lower side you can follow these steps to help improve it.
Next, determine what you can afford. Most lenders will don’t want your monthly payment can’t be more than 43% of what you earn each month. This is called the, debt-to-income ratio. Also, now is the time to create a plan for how you will start saving for your down payment. Lenders look for the money to be there for at least 60 – 90 days prior to issuing a loan so the sooner you can show proof of stability the better.
9 Months Out – Start researching where you want to live. Consider how schools, and commute times/distance may factor into your overall budget. Additionally, start making a list of “must-haves.” The more organized about where you want to live and what you have to have in a home, the less time you’ll waste looking at homes that don’t truly suit your needs. This is also the time to start setting aside money for two more important things. The first is miscellaneous expenses associated with purchasing a home such as: an inspection and closing fees. The second is for home maintenance. Be sure you have the resources to call a plumber or pay for any flukes that pop up.
6 Months Out – Start collecting all the necessary paperwork for your loan. The amount of paperwork a bank requires when applying for a loan is enough to make our heads spin, let alone a first time homebuyer’s! Give yourself ample time to dot all your “I’s” and cross all your “t’s.” This will help prevent any last minute issues that might come up the closer you get to closing as well as eliminate the stress that comes along with scrambling for documents at the last minute.
3-Months Out – Obtain pre-approval for the amount you intend to borrow. Many real estate agents and sellers will only deal with those who have pre-approval. It shows them you won’t waste their time; you are serious and have the financial means to buy. Once you have pre-approval you can start shopping for a home!
When you do find that perfect place, you can expect the final two months to include: making the offer/going through the negotiation process, getting a home inspection, obtaining homeowners insurance, the final walk-through and closing with the lender.
Sound like a lot to manage on your own? As Realtors® we’re experienced in the process and can help you navigate each step. Contact us with your questions or if you’re ready to get started.
