Buying your first home is exciting and fulfilling. We're calling all first time home buyers, and saying "Use this checklist, and follow this timeline." We want to help you make your home purchase completely successful. Exciting, fulfilling, and successful - make that your motto.
Buying a home successfully takes planning and thought. This checklist covers all the essential parts; follow it, work with a successful local Realtor, and, together, you will succeed. Let's begin with the obvious:
Why do you want to buy? Be clear about your reasons. You want your own home to enjoy, to live in, and to build equity for your future. Remember that, as well as a home, you also "buy" the neighborhood. Whatkind of neighborhood do you want to be part of? What about commuting distance, the social scene, the school district? Think about these suggestions, and keep them front and center as you plan ahead. Now let's look at the practical details.
1. About a Year Out (But It's OK if you don't have a year)
- Know your credit score. Your "FICO score" is a code that all lenders use to decide how reliable you are, and how much they should consider lending you. You are entitled to a free credit report every year. You need more than just the score, you need to check the report to make sure it is accurate. Correct all errors as soon as you can.
- Work to improve your score if you need to.
- Compare your gross income to your regular monthly outgoings. Lenders like to keep total payments, including your mortgage to between 35% and 43% of your gross income.
- If you know how much you may be able to borrow, you will get an idea as to how much house you can afford. It's also a good idea, at this stage, to contact a successful, local Realtor. A good Realtor will be able to make suggestions, tell you about homes in areas, and will be able to keep you as up to date with the market as you want. This will help to keep you on track, and it adds to the excitement as the months tick by.
Save for your down payment, and closing costs. The more free cash you have in the bank, the better. If a family member intends helping you with your down payment, have them deposit the money in your account at least three months before you need it; last-minute gifts may not count.
2. About 9 Months Out
- Begin to check out neighborhoods, house types, floor plans, etc. Ask your Realtor to tell you when there are open houses you should look at.
- Budget for your upfront costs if you haven’t already started. You will have closing costs, down payment, lender’s insurance, pre-paid property taxes and home owner insurance, lender fees, home inspection and appraisal costs. Put aside something extra, no matter how small, every month.
3. About 6 Months Out
- Start putting your paperwork together. Lenders want as much financial history as possible. Keep a file of your previous two years’ tax returns, W-2s (or 1099s) credit card statements, bank statements, places you’ve lived, so your lender can get landlord references if needed, SEP or 401k statements, etc.
- Interview possible lenders. Seek your Realtor’s advice on this as well. It is easy to go online and get a mortgage quote, but there is more to a mortgage than the interest rate, and more to closing than upfront costs. An online lender based on California, say, is three hours behind us. Successful closings rely on your Realtor, lender, and title agent working in unison.
- Know the kind of mortgages available to you.
4. About 3 Months Out
- Get pre-approved (not just pre-qualified) for your loan. Your Realtor or lender will explain the difference.
- Start looking at the kind of properties you want, and can afford, that are in the neighborhoods you want. This is where it really gets exciting!
- Ask your Realtor about the process from here on in. How are offers presented, how can you make your offer as attractive to the seller as possible, what happens after an offer is accepted, etc? The more you know, the more successful you will be.
5. About 2 Months Out
- Look in earnest, and be ready to make an offer.
- Ask for a copy of the contract documents, so you know the small print – your and the seller’s rights and responsibilities.
6. About 1 Month Out
- If you have not already, write your offer on your dream home.
- Make sure all of your financials are in place for your chosen lender.
- Have your good faith deposit available (not in a timed account) so you can write the check with your offer.
- Understand the mortgage documents your lender passes to you, so you know what you will sign.
- Understand the title commitment from the title agent.
- Get your home-owner insurance in place, and give the details to your lender and the title agent.
- Know when the date, location, and time of your closing.
- Know what you must bring with you to the closing, so you have it ready.
- Have your Realtor arrange a final walk-through of the property before you go to closing, so you can close with confidence that everything is as you expect it to be.
And that’s it! Plan ahead, do your homework, with successful professionals, such as ERA Grizzard REALTORS® , so you stay excited, fulfilled and successful. Let us be in your corner to make your transaction as seamless as possible - Click here to learn more about how we can help you today.