Whether it’s your first time, or fifth time, buying a home is exciting and marks a major milestone. For those new to the process, it can be overwhelming as there are many steps before the keys are handed over.
If you’re looking to begin the homebuying process, below are some important do’s and don’ts to keep in mind.
Do – Get Preapproved For A Home Loan
If you’ve determined homeownership makes sense for you, one of the first steps includes working with a mortgage lender to become preapproved for a home loan. Of course, cash is always the best option when buying a home, but it’s not practical for most people. Typically, you’ll be asked for proof of income, a list of assets you own, and employment verification. A copy of your credit report will also be pulled. Depending on the type of loan, individuals can be approved with a credit score as low as 580, but keep in mind, higher scores tend to receive the best interest rates.
Once all documentation is in order and you meet the qualifications, you will receive a letter that includes the maximum loan you can take out, better known as a preapproval letter. Keep in mind, just because you are preapproved for a certain amount, doesn’t mean you have to take the maximum amount. The higher your loan is, the higher your monthly mortgage payment will be.
Don’t – Forget To Estimate Closing Costs
Expenses for a new home include much more than the buying price and down payment, and they can add up quick. Additional costs include home appraisal fees, underwriting fees, survey fees, title insurance and homeowner’s insurance fees, and curtain costs (new furniture, appliances, etc.).
Typically, these additional costs will total out to about 2-5 percent of your home’s value. It’s highly recommended that you factor in these costs when determining how much of a down payment you can afford.
Do – Find A Real Estate Agent
This is a very important step in the homebuying process. By hiring a Realtor, they will help guide you through the process of finding and buying your new home, answering any questions you may have along the way.
An agent will take the time to get to know you and will do the research it takes to find a home that best suits your wants and needs.
Don’t – Make Big Credit Card Purchases Before Closing
It may be tempting to splurge on that new set of patio furniture or buy a brand-new TV for the living room, but you’ll want to hold off until the keys are in your hand if you’re planning on charging it.
Though you may be in the final steps of the homebuying process, mortgage lenders will recheck your credit report to see if you have incurred any additional debt before the closing. If your debt-to-income ratio increases, it’s an indicator that you pose more of a risk when it comes to making mortgage payments, a red flag to lenders.
Keep in mind, a mortgage can be denied any time before closing.
Do – Your Research
You don’t have to make an offer on the very first home you see! Take the time to compare several homes.
After you receive your preapproval letter and set a budget for yourself, it’s time to do some research. It’s recommended you compile a list of home features you’re looking for. If you’re buying a home with someone else, make two lists and compare. This will serve as a foundation for your realtor when looking for homes that suit your needs.
Don’t – Let Your Emotions Run The Show
It’s unlikely you’ll fall in love with the very first home you come across on Zillow. Finding a home takes time and patience.
Don’t become emotionally attached to a home before it is yours. Keep your options open.
If you’ve found a home that fits your liking, it may be time to make an offer. Remember, like a job interview, you may be up against others when placing an offer on a home. If someone else ends up making a better offer, don’t give up. Continue searching for your dream home.
The Bottom Line
Taking the leap into homeownership doesn’t have to be a dreadful experience. The Russell Company is here to lend a helping hand and make the process as smooth as possible. It’s our mission to help guide you through the homebuying process and help you find the home of your dreams. Give us a call or send a text today at 765-497-0700.