Top Tips to Prep for your Home Purchase

When buying a home, whether it is your first time or fourth, you can take steps to prep for the event. Most home buyers will need a loan; the process and all the paperwork required can be challenging, so take your time to research and understand the process before diving into it.  Here are some steps to take and think about when getting a home loan. Thinking about the process of obtaining a loan is an important first step in the process; you want to make sure that you are pre-approved for a loan before you spend time viewing properties. It will save you time and heartache down the road; the last thing you need is to fall in love with a home that is out of your price range.

Weigh your loan options 

You can apply for a variety of various forms of loans. Because each loan has different eligibility standards with additional program fees or expenditures, it’s prudent to research to see which ones you might qualify for. Conventional loans and government-backed loans, such as FHA, VA, and USDA, are the most common types of loans. You don’t have to choose the first lender you come across. Take some time to look into a few different lenders since some may offer a better loan rate, mortgage quote, or faster closing date.

Study the market

You must study the real estate market in the selected location after choosing the best time to buy a house and create your desires list. This is why you should choose an expert real estate agent for the best results; their local market knowledge is invaluable. The real estate agent will be able to describe the current state of the market in terms of home inventory and prices. They’ll be able to walk you through various contingencies, how to deal with several bids on the house, negotiate with the seller, and give you an idea of what the process entails. Real estate professionals will also be able to help you find a trusted local lender.

Review your credit score

When applying for a loan, your credit is significant because it reflects your creditworthiness to lenders and significantly impacts the interest you will pay. Before applying for a loan, we recommend verifying your credit report and monitoring your score regularly. Some lenders have a service that can help you repair your credit given enough time. You must start this process early if you’re unsure about the condition of your credit.

Set aside enough closing budget

As the buyer, you’ll be liable for closing expenses, which must be paid on closing day, so make sure you have enough money set aside to cover them. Typically, buyers closing costs range between 3% to 4% of the loan amount, so for a $300,000 loan, save $9,000 - 12,000. 

Closing costs will cover things like the loan origination fee, underwriting fee, appraisal fee, homeowner’s insurance, property taxes, survey, and much more. Closings costs may vary based on your location, the price of the home, or if the seller agreed to pay for a portion of it.

Set aside a moving budget

Not only does it cost a lot of money to buy a house, but it also costs a lot of money to move out of an old one and into a new one. Along with closing costs, you’ll need money set aside for things like turning on the utilities, hiring a moving company (or renting a moving van if you’re doing it yourself), purchasing new furniture, renting a storage facility if necessary, and other costs. You’ll also want to set aside a budget for minor repairs or changes you wish to make, such as painting rooms.

Receive your mortgage pre-approval letter 

Once you’ve identified a lender and you’ve provided the necessary paperwork, you will receive your pre-approval letter. This document will show you how much home you can afford based on factors like your income, debt, and credit score. This amount may be more or less than your projected budget. As mentioned above, this is a crucial piece before you kick off your home search. Shopping for homes in the right price range will save you time and keep your expectations where they need to be. Also, keep in mind that shopping at the absolute top of your budget is rarely a wise choice.