In my last blog post, I wrote about 3 things you shouldn’t do if you want to buy a house. Today, I am telling you 3 things you should do!
1. Talk to a lender and get pre-approved for a mortgage.
Whether or not you are a first-time homebuyer, you should talk to a lender early in the home buying process. They can help you understand your finances and will help you find the sweet spot between your lifestyle and your potential mortgage. They will also pre-approve you for a mortgage.
When you make an offer on a house, you will need to send a copy of your pre-approval letter from a lender stating that you are qualified for a specified purchase amount. You don’t want to fall in love with houses you can’t afford.
If you want to use a bond loan/program/first-time homebuyer program, they can tell you want you need to do to prepare for that. Some require you to take a class before you can use the funds.
Your lender can explain the do’s and don’t’s during your house search (like don’t buy a new car).
And if you have things you need to work on (paying down a certain amount of debt, improve your debt-to-income ratio, or increasing your credit score), they can give you a plan for which specific things you should do first.
2. If you haven’t done so already, start saving for your down payment and closing costs
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How much do you need to save for your down payment? It may be as little as 0% for a VA loan, 3.5% for an FHA loan, 3% or more for a conventional loan, or 20% (or more) if you have a jumbo mortgage loan or if you are purchasing an investment property or if you do not want to pay PMI (Private Mortgage Insurance). The less you put down, the more your monthly payment will be, so determining the best down payment for your loan product and budget is an important first step.
On top of your down payment, you will need cash to cover closing costs. These costs are typically about 3% of the sales price and include your lender fees for the loan, survey fees, title insurance, title search fees, recordation and transfer taxes, etc.
3. Build a relationship with a real estate agent.
You need an agent who can help you understand the home buying process, explain the sales contract, and get you up to speed on what is happening in the market. Working with an exclusive buyer agent means you have someone dedicated to your house search, someone to get you into the right house for you and for the lifestyle you want to have.
The home-buying process is a lot more involved than any list of top 3 do’s and don’t’s can highlight, but I hope this has been helpful in getting you started on the right path. Buying a house involves a team of people and it is important to find the right people to partner with you on your search. I am connected to a talented network of lenders, title attorneys, home inspectors, and contractors. I would be happy to connect you with them so that you can have a smooth and enjoyable home-buying transaction.
