Buying your first home is an exhilarating experience! It may mean you’re growing your family or you’ve finally gotten that promotion that will allow you to make a big investment. However, it can also be a very stressful time. Through the help of your realtor, lender and other great resources, you can be fully prepared for this exciting transition. The following steps map out the best way to prepare for your home purchase:
9 Months Out
- Check your credit score. A Federal Trade Commission study found one in four Americans identified errors on their credit report, and 5% had errors that could lead to higher rates on loans. Knowing in advance will give you time to fix any errors or raise your credit score if necessary.
- Talk to a mortgage broker to find out what you can afford. Lenders look for a total debt load of no more than 43% of your gross monthly income (called the debt-to-income ratio). This figure includes your future mortgage and any other debts, such as a car loan, student loan or revolving credit cards. Look for a mortgage broker who will shop for a competitive loan rate for you among multiple lenders.
- Prioritize what you want in your home and neighborhood. Unless you’re buying new construction, no home will have everything you want. In order to focus your search and find your ideal home, it’s important to know what you can and can’t live without.
6 Months Out
- Contact your realtor to map out your timeline and discuss your goals. An agent will work in your best interest to find you the right property, negotiate with the seller’s agent and shepherd you through the closing process.
3 Months Out
- Focus your search and start actively looking at homes. At this point, hopefully you’ve scoped out neighborhoods that interest you and browsed through potential homes online. Now your realtor will schedule times for you to go out and view the homes.
- Work with your lender to get approved for your loan. He or she will most likely require your W-2 forms, pay stubs, tax returns, bank statements, credit card and loan statements, and more.
2 Months Out
- Make an offer on a home. It usually takes at least four to six weeks to close on a home. If you have a firm move-out date, allow enough time to deal with any hiccups that can delay closing.
- Get a home inspection. One of the first things you’ll do after an offer is accepted is have a home inspector look at the property. If the home inspector finds something that needs repair, that may cause you to restructure the deal and could delay closing.
- Find a real estate lawyer. Your agent will most likely be able to recommend someone to you that he or she has worked with in the past.
1 Month Out
- Stay in constant communication with your realtor, your lender and your lawyer. You’re in the home stretch and you want to ensure that everyone has their ducks in a row for closing.
- Get insurance for your new home. Don’t forget to secure insurance before closing. You’ll need to provide proof of insurance on or before closing.
- Do a final walk-through of your new home. This usually occurs the day of closing to make sure the home is in the shape you and the seller have agreed upon.
- Get a cashier’s check or bank wire for closing. You’ll get the amount owed at closing a few days before closing so you can secure a cashier’s check or arrange to have the money wired. Regular checks aren’t accepted.
While this list might seem overwhelming, your real estate agent will be there every step of the way to walk you through it. Please feel free to reach out to me with any questions at Julia@reprealestate.com.
Information taken from Houselogic.com. Photo taken from City of Chicago.