what do you need to do before owning a home

1 year ago 35

Buying a home is a significant financial decision that requires careful planning and preparation. Here are some things to do before owning a home:

Define your personal and financial goals: Determine why you want to buy a house and what you want in a home, such as amenities and location. Analyze whether it makes sense for you financially, and be sure youre prepared for the ongoing expenses of maintaining a home.
Check your credit score: Your credit score is one of the most significant factors in your loan terms. Know your score before trying to get a loan, and take the time to repair it if it is lower than 700.
Get pre-approved for a mortgage: Understanding how to get a mortgage includes reviewing the approval process before looking at homes. It is one of the most critical steps in the home-buying process. A pre-approval letter shows home sellers and real estate agents that youre a serious buyer and can give you an edge over home shoppers who havent taken this step yet.
Determine how much home you can afford: Consider one-time expenses as well as new, recurring bills when calculating how much money you need to buy a house. Dont stretch beyond your means unless you want to eat spaghetti dinners at home every weekend.
Save for a down payment and closing costs: Youll need to put down at least 20% on a conventional home loan. Stash away 2% to 5% of your planned purchase price to cover closing costs.
Find a good real estate agent: A good real estate agent will scour the market for homes that meet your needs and guide you through the negotiation and closing processes. Get agent referrals from other recent home buyers, interview at least a few agents, and request references.
Avoid making big purchases or changes: Dont finance a car or another big item before buying a house. Dont max out your credit cards, assume you need 20% down, quit or change jobs to a new field, or go house hunting before getting pre-approved.